GST input credit: 5 mistakes that quietly cost businesses money

Input tax credit is one of GST's genuine benefits — and one of its quietest leaks. The mistakes below recur across hundreds of SME books we've reviewed. None are exotic; all of them cost real money.

Mistake 1: expenses paid from personal accounts never enter the credit trail. Fuel, travel and raw materials paid by the owner's UPI never reach the books, so the ITC is simply abandoned. Fix: route every business purchase through the business account or card, or log personal-paid invoices monthly for reimbursement and credit.

Mistake 2: no GSTR-2B reconciliation. If your supplier files late or not at all, your claimed credit can be challenged later. A monthly 2B match against purchase invoices catches the mismatch while you can still chase the supplier.

Mistake 3: ignoring reverse charge. GST paid under RCM on imports, GTA transport or legal services is both a liability you must discharge in cash and a credit you're entitled to claim. Miss either side and you lose twice.

Mistake 4: e-invoice and document mismatches. Above threshold turnover, e-invoicing mismatches between your records and the portal freeze credit during scrutiny. A pre-filing document check costs minutes.

Mistake 5: claiming blocked credits. Canteen expenses, club memberships and motor vehicles for non-transport use are blocked under Section 17(5). Claiming them invites interest plus penalty that dwarfs the original credit.

The quarterly habit: one hour with your books — 2B reconciled, personal-paid invoices logged, RCM checked, blocked credits filtered. Businesses that do this recover the fee of a good accountant many times over. If you'd rather not, our GST & Bookkeeping partners run this reconciliation every month from ₹2,499.