If there is one area in GST that creates the maximum tension for businesses, accountants, and even GST officers, it is Input Tax Credit (ITC). And honestly, it’s not surprising.
ITC is full of tiny rules, deadlines, conditions, reconciliations, reversals, amended invoices, supplier issues, portal issues — and all of this becomes a perfect recipe for ITC mismatch notices.
Most GST notices under:
- Section 16 (ITC conditions)
- Section 17 (blocked ITC)
- Rule 36(4)
- Section 75 (demand)
- GSTR-2B mismatch
- ITC ineligible vs eligible difference
…come only because something in ITC went wrong.
This blog breaks everything into a simple, real-world explanation with examples so you can avoid those scary ITC mismatch messages on the portal.
1. The Biggest Problem in GST: Claiming ITC Without Checking GSTR-2B
I know many businesses still follow the old habit of checking GSTR-2A and claiming ITC.
But GST law is very clear now:
“The ONLY document for eligible ITC is GSTR-2B (auto-drafted, static monthly statement).”
If ITC is not appearing in 2B, it is treated as ineligible, and notices immediately start coming.
✔ Common mistake:
- “Invoice in 2A, so I took ITC.”
- → Wrong. 2A doesn’t matter.
✔ Correct rule:
Take ITC only from 2B, unless it is a special case:
- RCM invoices
- ISD invoices
- Import IGST
- OIDAR GST
Everything else = only 2B.
2. Supplier Didn’t Upload Invoice → ITC Reversed & Notices Come
This is the most common ITC mismatch.
The mistake:
- You booked ITC because you have the invoice.
- But supplier did not upload it (or uploaded in wrong month).
What 2B shows:
❌ ITC not appearing
What GST notices say:
“You have claimed excess credit which is not appearing in GSTR-2B.”
Solution:
- Keep suppliers compliant
- Don’t take ITC until invoice appears in 2B
- Use auto-reconciliation monthly
- Blacklist non-compliant vendors
3. Wrong GSTIN of Buyer (You) – Invoice Uploaded to Wrong Customer
This also happens more than people admit.
Supplier uploaded invoice but:
- to wrong GSTIN
- or wrong branch
- or wrong state
- or wrong place of supply
Result:
Invoice never appears in 2B → ITC ineligible → ITC mismatch notice.
Solution:
- Match purchase register with 2B every month
- When mismatch found → ask vendor to amend invoice
4. Claiming ITC After the Time Limit of Section 16(4)
This is one of the most common causes of ITC notices.
If your supplier uploaded invoice late or you simply forgot to take ITC, you cannot take it after Section 16(4) date.
- For FY 2024–25, the last date is:
- 30th November 2025 (or date of annual return, whichever earlier).
If someone claims after that date:
- → System flags it
- → Officer sends ITC mismatch notice
- → Credit gets reversed with interest
5. Claiming Ineligible ITC (Section 17(5) Blocked Credits)
Many businesses still try to claim ITC on:
- construction
- motor vehicles
- food & catering
- employee benefits
- goods lost or stolen
- capital goods for exempt services
- club memberships
- works contract for immovable property
These are blocked credits, and the system picks them up during scrutiny.
Result:
- → Notice
- → Reversal
- → Interest + penalty sometimes
6. Claiming ITC on Proforma Invoice, Purchase Order, or Delivery Challan
ITC is allowed only on tax invoice, debit note, or RCM self-invoice.
Proforma invoice or PO does NOT generate ITC.
Still, many accountants book ITC early.
→ 100% guaranteed ITC mismatch notice.
7. GSTR-3B Wrong Reporting vs GSTR-2B Auto-ITC
This is also a big mismatch.
If you put ITC in:
- wrong column
- wrong tax type
- outward RCM instead of inward
- ISD in normal ITC
- IGST instead of CGST/SGST
…it creates mismatch in:
- system auto-calculation
- scrutiny
- DRC-01B QRMP mismatch notices
8. ITC Claimed in Wrong GSTIN Branch (Multi-State Units)
Example: Company has branches in:
- Maharashtra
- Karnataka
- Gujarat
If Karnataka branch takes ITC of Maharashtra invoice → 100% mismatch.
Each GSTIN is a separate “person” in GST.
9. Taking ITC Twice Due to Amendment of Invoice
Example:
- Supplier issues an invoice
- Then issues an amendment
- You claim ITC on both.
→ Portal automatically catches this mismatch.
→ Notice for excess ITC comes.
10. ITC Claimed on RCM But RCM Tax Not Paid
Rule 36 allows ITC on RCM only after paying the RCM liability in cash.
If you claim ITC but forget to pay RCM in cash → mismatch notice.
11. Not Reversing ITC Under Rule 42 & 43 (Common ITC for Exempt Supplies)
If you:
- provide exempt services
- provide taxable + exempt mix
- rent residential property
- provide healthcare + paid services
- export exempt supplies
- have interest income (even OD interest)
Then proportionate ITC reversal applies.
If not done → mismatch in annual return, DRC-01, scrutiny.
12. ITC Not Reversed When Payment Not Made Within 180 Days
Section 16(2):
If you don’t pay the supplier within 180 days:
- → Reverse the ITC
- → Later re-claim when paid
Not reversing → GST notice.
13. Taking ITC on Goods Not Received (Partial Delivery)
ITC is allowed only when goods are actually received.
If:
- PO raised
- Invoice received
- But goods not delivered
→ ITC not allowed → Mismatch in audit
14. Claiming ITC for Personal or Non-Business Use
Examples:
- Staff laptops used for personal use
- Company car for director’s personal use
- Hotel bills for personal stay
- Mobile bills of employees
If used for personal consumption → ITC not allowed.
15. Not Matching Books With GSTR-3B & 2B (Big Cause of Notices)
Every month, you should reconcile 3 things:
- Purchase Register
- GSTR-2B
- GSTR-3B ITC Claimed
If all 3 do not match → you will definitely get mismatch notices.
16. How to Avoid ITC Mismatch Notices (Practical, Real-World Tips)
✔ Tip 1: Reconcile 2B with Books EVERY month
No delay.
✔ Tip 2: Don’t claim ITC on invoices missing in 2B
Simple rule that solves 80% problems.
✔ Tip 3: Keep suppliers compliant
Remove those who don’t file GSTR-1 & GSTR-3B regularly.
✔ Tip 4: Avoid taking ITC before receiving goods/services
Even if invoice received, wait for goods.
✔ Tip 5: Reverse ITC immediately if payment not made in 180 days
And reclaim later.
✔ Tip 6: Use proper ledger mapping (CGST/SGST/IGST)
Avoid misreporting.
✔ Tip 7: Apply Rule 42/43 if exempt turnover exists
Or else notice is guaranteed.
✔ Tip 8: Maintain a clean vendor master
Check GSTIN validity, filing status, PAN, branch code.
✔ Tip 9: Do not rush to claim ITC in March
This is the biggest mistake in FY closing.
17. Final Summary
More than 70% of GST notices are related to wrong ITC. Not because taxpayers want to make mistakes, but because ITC rules are interconnected with many things:
- Supplier filing
- Correct invoices
- GSTR-2B
- Payment timelines
- Exempt turnover
- Blocked credits
- RCM
- Reversals
- ITC eligibility
If you keep monthly reconciliation smooth and avoid claiming ITC blindly, you will never face mismatch notices.
GST is built on “match–claim–reconcile”, and that one habit alone can prevent most ITC-related disputes.
