GST Input Tax Credit Calculator (Rule 42 & 43)
Input tax credit is the heart of GST, but not every rupee of tax paid on purchases can be claimed. Credit on certain items is blocked outright under Section 17(5), credit used exclusively for exempt supplies or personal purposes is denied, and credit on inputs used partly for taxable and partly for exempt supplies must be reversed proportionately under Rule 42 (inputs and input services) and Rule 43 (capital goods). This calculator walks through the statutory formula step by step and tells you the eligible ITC and the reversal to report in Table 4(B) of GSTR-3B.
Rule 42 method
- T – total input tax on inputs and input services for the period
- T1 – used exclusively for non-business purposes; T2 – exclusively for exempt supplies; T3 – blocked u/s 17(5)
- C1 = T − (T1 + T2 + T3) – credited to the electronic credit ledger
- T4 – used exclusively for taxable and zero-rated supplies
- C2 = C1 − T4 – common credit
- D1 = C2 × E ÷ F – attributable to exempt supplies (E = exempt turnover, F = total turnover in the state)
- D2 = 5% of C2 – deemed non-business use
- C3 = C2 − D1 − D2 – eligible common credit; total eligible ITC = T4 + C3
Rule 43 for capital goods
Credit on common capital goods (Tc) is spread over a useful life of 60 months. Each month Tm = Tc ÷ 60, and the reversal is Te = Tm × E ÷ F, added to output tax liability with the Rule 42 amount.
Worked example
Total input tax ₹1,80,000; T1 ₹5,000, T2 ₹10,000, T3 ₹15,000, T4 ₹1,00,000. Exempt turnover ₹4 lakh out of ₹24 lakh total (ratio 16.67%). C1 = 1,50,000; C2 = 50,000; D1 = 8,333; D2 = 2,500; C3 = 39,167. Eligible ITC = 1,00,000 + 39,167 = ₹1,39,167. Common capital goods credit of ₹36,000 gives Tm = 600 and Te = ₹100 per month. Total reversal in Table 4(B)(1) = 8,333 + 2,500 + 100 = ₹10,933.
Other conditions
Credit is also unavailable where the invoice is missing from GSTR-2B, where the supplier has not paid tax, or where you have not paid the supplier within 180 days (reverse with interest and re-claim on payment). Rule 42 reversals are provisional and must be trued-up for the whole financial year before the September return of the next year.
Frequently Asked Questions
What are blocked credits under Section 17(5)?
Motor vehicles for personal use (seating up to 13), food and beverages, outdoor catering, beauty treatment, health and life insurance for staff (unless obligatory), club membership, works contract and construction of immovable property on own account, goods lost or given as gifts, and tax paid due to fraud or detention.
Is interest on fixed deposits counted as exempt turnover?
For Rule 42, interest income from deposits and loans is excluded from exempt turnover except for banks and NBFCs (Explanation to Rule 42).
When must Rule 42 be finalised for the year?
Before the due date of the GSTR-3B for September of the following financial year; any shortfall carries 18% interest from 1 April.
Why 5% for D2?
Rule 42 deems 5% of common credit to relate to non-business use whenever inputs serve both business and other purposes.
Disclaimer: This tool is for general information and estimation only. Tax rates and rules change — verify with official sources or a professional before acting. Read full disclaimer.