1. What input credit actually is
The GST you paid on your purchases is set off against the GST you collected on your sales, and you pay the difference. That is the whole mechanism, and it is why GST is a tax on value added rather than on turnover. It also means your purchase records matter exactly as much as your sales records — a shop that bills carefully and files purchase invoices on a spike is throwing away half the system.
2. It depends on your supplier, not on you
This is the part that surprises people. Credit is available only for invoices your supplier has actually reported in their own return. You can hold a perfectly valid tax invoice and still not get the credit, because the supplier did not file. That makes reconciliation against GSTR-2B — the statement of credit available to you — a monthly discipline rather than an annual clean-up.
3. The reconciliation, in practice
Compare what your books say you bought against what appears in GSTR-2B. The differences fall into three groups: invoices you have but the supplier has not reported, invoices the supplier reported that you never entered, and amounts that differ. The first needs a phone call to the supplier while the quarter is still open. The second means bills sitting unentered on your desk. The third is usually a rate or a value keyed wrongly on one side.
4. Where credit is blocked entirely
Some credit is not available regardless of documentation — certain motor vehicles, goods lost or destroyed, items used for personal consumption, and a defined list of other cases. Works contract services for construction of immovable property have their own restrictions that catch out businesses building their own premises. Ask your CA before assuming a large purchase carries credit.
5. The time limit
Credit for an invoice cannot be claimed indefinitely — there is a cut-off tied to the return period for a particular month of the following financial year, or the filing of the annual return, whichever is earlier. A purchase bill discovered eighteen months later is usually a bill whose credit is gone. That deadline is the single strongest argument for entering purchases as they arrive rather than in a rush before filing.
6. What makes it easy
Nothing about this is difficult if every purchase is recorded against a named supplier with its invoice number and date at the time it arrives. Then the 2B comparison is matching two lists rather than reconstructing one, the gaps are named documents rather than an unexplained shortfall, and the phone call to a supplier who has not filed happens while it can still be fixed.