The article explains that under current GST scrutiny, the eligibility of Input Tax Credit (ITC) hinges on a consistent documentation trail rather than just invoices. Chartered accountant Nitin Kaushik outlines the types of records—purchase orders, GST invoices with e‑way bills, GRNs, bank statements, and GSTR filings—that authorities examine. He stresses that due diligence and alignment of all records can protect bona fide buyers from penalties.
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India’s GST e-invoice and e-way bill system will enforce new API validations from 1 August 2026. Ship-to GSTIN becomes mandatory, cannot match Bill-to GSTIN, and must align with state codes. ERP users must update master data, payloads, and handle URP for unregistered consignees.
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The article explains that while GST was designed to eliminate cascading tax and enable seamless input tax credit (ITC), the reality has become a compliance-driven process. ITC eligibility now hinges on invoice matching, GSTR‑2B reconciliation, Rule 36(4), Section 16(2)(aa) restrictions, and the Invoice Management System (IMS), making credit availability conditional on supplier filings and compliance data. Businesses face working‑capital pressure and litigation due to delayed or denied ITC.
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Key Takeaways
ITC eligibility now hinges on a consistent documentation trail that collectively tells a coherent story of intent, movement of goods, financial settlement, and statutory reporting.
Authorities frequently issue notices under Sections 74 and 74A of the GST framework, focusing on the authenticity of transactions.
Expected documents include purchase orders, quotations, GST invoices with e‑way bills, goods receipt notes, bank payment proofs, GSTR‑1/3B disclosures, GSTR‑2B reconciliation, and matching ledger entries.
No, the law does not intend to penalise bona fide buyers who can show due diligence—receipt of goods, payment, and compliance checks—even if a supplier later defaults.
Primary source
Read the full article at BusinessTodayThis summary was published on VATfaqs.com on 15 February 2026. It relates to VAT developments in India. The original source is BusinessToday.
