What is Consequences of wrongful claim of Input Tax Credit (ITC)?

Claiming ITC that you are not eligible for (e.g., on blocked credits like food and beverages, or on fake invoices) is a serious offense. It will result in the reversal of the ITC along with interest at 24% per annum and penalties that can go up to 100% of the tax amount.

Startup Example: A startup claims ITC on invoices from a supplier who did not actually supply any goods. During a GST audit, this is identified as a fraudulent claim, leading to ITC reversal and heavy penalties.

Our bookkeeping services ensure ITC is claimed only on eligible invoices.