The Goods and Services Tax (GST) is an extensive indirect tax system implemented in India to simplify and unify multiple tax structures. For businesses, GST allows the benefit of claiming Input Tax Credit (ITC) on goods and services used for business purposes. With the high rise of online shopping and e-commerce platforms, many businesses now make purchases online. The good news is — you can claim GST on these online purchases too. However, you must follow specific procedures and meet eligibility criteria to do so.
In this article, we will explain how to claim GST on purchases made online in a simple and step-by-step manner.
What is Input Tax Credit (ITC)?
Input Tax Credit (ITC) means that if you are a GST-registered business, you can reduce the tax you have paid on your inputs (purchases) from the tax you need to pay on your outputs (sales). For example, if you bought goods worth ₹10,000 and paid ₹1,800 as GST, and later sold goods and collected ₹2,500 as GST, you can deduct the ₹1,800 paid earlier and only pay ₹700 to the government.
Can You Claim GST on Online Purchases?
Yes, GST can be claimed on purchases made online, but only if certain conditions are fulfilled. These purchases can be from e-commerce platforms like Amazon Business, Flipkart, Meesho, and others, or directly from online stores.
Conditions to Claim GST on Online Purchases
To claim GST input on your online purchases, the following conditions must be met:
1. You Must Be a GST Registered Business
You can only claim GST if your business is registered under GST and you have a valid GSTIN (Goods and Services Tax Identification Number).
2. Vendor Must Be a GST Registered Supplier
The seller or supplier from whom you are purchasing the goods/services must also be registered under GST and must issue a proper tax invoice with GST details.
3. You Must Possess a Tax Invoice
The invoice should contain the following information:
- Invoice number and date
- Supplier’s GSTIN
- Your GSTIN
- Description of goods/services
- HSN or SAC code
- Taxable value
- GST amount (CGST, SGST, or IGST)
- Place of supply
4. Goods or Services Must Be Used for Business Purposes
ITC can only be claimed on purchases that are used for business-related activities. Personal purchases do not qualify for ITC.
5. Invoice Must Be Reflected in GSTR-2B
The input credit will only be allowed if the supplier has uploaded the invoice in their GSTR-1 return, and it reflects in your GSTR-2B.
6. Payment Must Be Made to the Supplier
You must pay the value of goods or services, along with the tax amount, within 180 days. If not, the ITC will be reversed until payment is made.
How to Claim GST on Online Purchases — Step-by-Step Guide
Step 1: Ensure GST-Compliant Vendor
When buying online, always make sure the seller is GST registered. You can check this by looking at the seller’s information or the invoice. On platforms like Amazon, choose Amazon Business sellers who provide GST invoices…!
Step 2: Update Your GSTIN in Your Account
Update your GSTIN in your account on the e-commerce platform before making any purchase. This will ensure that your GST details are auto-filled on the invoice…!
Step 3: Make the Purchase and Save the Invoice
After purchasing, download the GST invoice from your account. Ensure the invoice contains:
- Correct GSTIN (yours and suppliers)
- Invoice number
- Date
- Breakdown of GST charged
If the invoice is not proper or does not contain GST amount, you will not be able to claim the input credit..!
Step 4: Record the Purchase in Your Accounting System
Once you receive the product and invoice, then record the transaction in your accounting software or books of accounts. Categorize the GST amount separately.
Step 5: Verify the Invoice in GSTR-2B
Every month, download your GSTR-2B from the GST portal. This statement shows all the eligible ITCs based on supplier filings. Match your invoices with the entries in GSTR-2B.
If the invoice does not appear in GSTR-2B, contact the supplier to ensure they file their GSTR-1 return with the correct invoice details.
Step 6: Claim ITC in GSTR-3B
When you file your monthly GSTR-3B return, claim the eligible input tax credit. Ensure the GST amount you claim matches the amount in GSTR-2B.
Example Scenario
Let’s say you run a small business and purchase office supplies worth ₹5,000 from an online seller on Amazon Business. The invoice shows:
- Basic value: ₹5,000
- GST @ 18%: ₹900
- Total Invoice Value: ₹5,900
This invoice has your GSTIN and meets all conditions. The supplier uploads the invoice in GSTR-1, and it reflects in your GSTR-2B. You can now claim ₹900 as input tax credit in your GSTR-3B return.
Special Points to Note
- Amazon Business and Flipkart Business
These platforms allow businesses to access GST invoices easily. Always purchase through verified business sellers. You can also download invoices in bulk from your account dashboard.
- GST Paid on Delivery Charges
If the invoice includes delivery charges and GST is charged on the total amount, then you can claim GST on delivery charges too.
- Mixed Use Items
If the purchased item is used for both business and personal purposes, you can only claim a proportionate credit related to business use.
- Blocked Credit
Some items are not eligible for ITC, even if purchased online. These include:
- Food and beverages
- Club memberships
- Personal travel expenses
- Goods used for construction
Mistakes to Avoid
- Claiming ITC on personal purchases
- Claiming credit without checking GSTR-2B
- Using incorrect GSTIN on online platforms
- Not keeping proper records of invoices
Conclusion
Claiming GST on online purchases is a smart and wise move to reduce or minimize your tax liability, provided you follow the right prescribed process. Always buy from GST-compliant sellers, maintain proper documentation and reconcile your purchases with GSTR-2B. By staying compliant and organized, your business can save money and stay on the right side of tax regulations.
Related Services
FAQs
1. Can I claim GST on Flipkart or Amazon purchases?
Yes, if the seller is GST-registered and issues a valid tax invoice, and you provide your GSTIN.
2. What if my invoice is not showing in GSTR-2B?
You should contact the seller and ask them to file or correct their GSTR-1 return. You can only claim ITC if the invoice appears in GSTR-2B.
3. Is it mandatory to make the payment within 180 days?
Yes, if the payment is not made to the supplier within the period of 180 days from the date of your invoice generate, the input tax credit must be reversed.
