GST Compliance | ITC Management

ITC tagged at the bill. Reversals automated. Section 16 enforced.

Every bill line gets an ITC eligibility tag (eligible, ineligible, RCM, blocked) at capture. Section 17(5) blocked credits identified automatically. Rule 42/43 common-credit reversal computed on actual turnover. ITC at risk surfaced before payment.

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How it works

From bill capture to claimed ITC.

Step 01

Eligibility tag at capture

Each bill line gets an eligibility tag: eligible, ineligible (Section 17(5) blocked credits), RCM (claimed in next month) or partial.

Step 02

Rule 42/43 reversal

Common credit reversal computed monthly on actual exempt vs taxable turnover. Posted as a JE; drafted to GSTR-3B Table 4(B).

Step 03

ITC at risk surfaced

Bills with non-filer suppliers or 2B mismatches surface with ITC at risk visible. CFO sees the at-risk number before approving the next 3B.

Step 04

Audit-ready tracking

Per-bill ITC decision, reversal computation and override trail captured. Hash-verified evidence pack for GST audit.

What the system does

Capability, input, output.

Capability	Input	Output
Eligibility tagging	Bill line + GL + Section 17(5) rules	Eligible / ineligible / RCM tag per line
Rule 42 reversal	Exempt + taxable turnover	Common-credit reversal posted
Rule 43 reversal	Capital-goods ITC + 60-month spread	Monthly capital-credit reversal
ITC at risk view	2B match + non-filer status	At-risk ITC per bill, per period
Audit pack export	Per-period ITC decisions + overrides	Hash-verified workpaper

Eligibility tagging

Input

Bill line + GL + Section 17(5) rules

Output

Eligible / ineligible / RCM tag per line
Rule 42 reversal

Input

Exempt + taxable turnover

Output

Common-credit reversal posted
Rule 43 reversal

Input

Capital-goods ITC + 60-month spread

Output

Monthly capital-credit reversal
ITC at risk view

Input

2B match + non-filer status

Output

At-risk ITC per bill, per period
Audit pack export

Input

Per-period ITC decisions + overrides

Output

Hash-verified workpaper

Compliance + integrations

ITC done by the section.

Section 16 conditions enforced. Section 17 blocked credits identified. Rule 42/43 reversal computed on actuals.

Regulations we work within

Section 16, CGST Act

Eligibility conditions checked at the bill (PAN, GSTIN, payment status, 2B match).
Section 17(5)

Blocked credits identified automatically by GL and category.
Rule 42 / 43

Common-credit and capital-goods reversal computed on actual turnover.
Rule 36(4)

ITC capped to 2B amount per period.

Connects to

GSTN 2B match for ITC eligibility
Tally Prime ITC postings sync

ITC Management FAQ

What buyers ask.

Section 17(5) blocked credits. How are they identified?

Blocked categories (motor vehicles below seating capacity, food and beverages, club memberships, life insurance for personal use, works contract for civil construction) are tagged by GL and vendor category. Tags are configurable per organisation.

Rule 42 vs Rule 43. Both run automatically?

Yes. Rule 42 (common credit on inputs and input services for exempt + taxable supplies) runs monthly. Rule 43 (capital goods, 60-month spread) runs monthly per asset.

What about ITC reversal on payment beyond 180 days (Rule 37)?

Bills past 180 days with payment outstanding trigger an automatic ITC reversal in the next 3B. The reversal is reclaimed when payment is made.

Related features

See your at-risk ITC tonight.

Connect one GSTIN, free. The 2B match runs tonight; ITC at risk surfaces by morning. Rule 42/43 reversal drafts for the period.