{"id":4203,"date":"2026-05-29T20:51:01","date_gmt":"2026-05-29T20:51:01","guid":{"rendered":"https:\/\/aaxonix.com\/resources\/?post_type=glossary&#038;p=4203"},"modified":"2026-05-29T20:51:01","modified_gmt":"2026-05-29T20:51:01","slug":"input-tax-credit-itc-zoho-books","status":"publish","type":"glossary","link":"https:\/\/aaxonix.com\/resources\/glossary\/input-tax-credit-itc-zoho-books\/","title":{"rendered":"Input Tax Credit (ITC)"},"content":{"rendered":"<style>.gt-body{font-family:'Poppins',sans-serif;color:#111;line-height:1.75}.gt-def{border-left:4px solid #E8650A;padding:16px 20px;background:#fff8f4;border-radius:0 8px 8px 0;margin:0 0 32px;font-size:1.05rem}.gt-section{margin:0 0 36px}.gt-section h2{font-family:'Fraunces',serif;color:#0A1628;font-size:1.5rem;margin:0 0 12px}.gt-example-box{background:#f0f4ff;border-radius:10px;padding:20px 24px;margin:0 0 32px}.gt-example-box strong{color:#2563EB}.gt-related-pills{display:flex;flex-wrap:wrap;gap:10px;margin:0 0 32px}.gt-related-pill{background:#f7f4ef;border:1px solid #ddd8cf;border-radius:20px;padding:6px 16px;font-size:.875rem;color:#0A1628;text-decoration:none}.gt-faq-item{border:1px solid #ddd8cf;border-radius:10px;padding:16px 20px;margin:0 0 12px}<\/style>\n<div class=\"gt-body\">\n<div class=\"gt-def\">Input Tax Credit (ITC) in Zoho Books is the GST paid on business purchases that you are entitled to recover by offsetting it against the GST collected on your sales, reducing the net amount of GST you pay to the government in each return period.<\/div>\n<div class=\"gt-section\">\n<h2>How ITC is Captured in Zoho Books<\/h2>\n<p>When you record a vendor bill in Zoho Books from a GST-registered vendor with a valid GSTIN, the GST component on each line item is automatically posted to the appropriate ITC asset account: CGST ITC, SGST ITC, or IGST ITC. These accounts accumulate during the month and are reported in Table 4 of GSTR-3B as ITC available. Zoho Books tracks each credit separately because the utilisation rules for each ITC type differ.<\/p>\n<\/div>\n<div class=\"gt-section\">\n<h2>ITC Eligibility and Blocked Credits<\/h2>\n<p>Not all GST paid is eligible for ITC. Section 17(5) of the CGST Act lists blocked credits that cannot be claimed, including GST on food and beverages, personal travel, motor vehicles (except certain categories), construction of immovable property, and club memberships. When you record an expense in these categories in Zoho Books, you should post the full amount (including GST) to an expense account rather than capturing the GST as ITC. This requires careful account selection when recording bills and expenses.<\/p>\n<\/div>\n<div class=\"gt-section\">\n<h2>ITC Reversal in Zoho Books<\/h2>\n<p>ITC must be reversed in certain circumstances: if you do not pay the vendor within 180 days of the invoice date, if the goods or services are used for exempt or personal purposes, or if the vendor has not filed their GSTR-1 and the invoice does not appear in your GSTR-2B. Zoho Books supports ITC reversal through journal entries that debit the ITC asset account and credit an expense account. The reversal appears in Table 4B of GSTR-3B.<\/p>\n<\/div>\n<div class=\"gt-example-box\"><strong>Industry:<\/strong> Manufacturing \u2014 A Pune manufacturer pays INR 5.4 lakhs in IGST on raw material imports in a month. This is recorded as IGST ITC in Zoho Books. Against this, the company has IGST Output Tax of INR 3.2 lakhs from sales. Zoho Books applies the INR 3.2 lakhs IGST ITC to offset the IGST output, then uses the remaining INR 2.2 lakhs IGST ITC to offset CGST and SGST liabilities, resulting in zero cash GST payment for the month.<\/div>\n<div class=\"gt-related-pills\"><a href=\"https:\/\/aaxonix.com\/resources\/glossary\/gst-zoho-books\/\" class=\"gt-related-pill sp-content-link\">GST<\/a><a href=\"https:\/\/aaxonix.com\/resources\/glossary\/gstr-3b-zoho-books\/\" class=\"gt-related-pill sp-content-link\">GSTR-3B<\/a><a href=\"https:\/\/aaxonix.com\/resources\/glossary\/itc-reconciliation-zoho-books\/\" class=\"gt-related-pill sp-content-link\">ITC Reconciliation<\/a><a href=\"https:\/\/aaxonix.com\/resources\/glossary\/reverse-charge-mechanism-zoho-books\/\" class=\"gt-related-pill sp-content-link\">Reverse Charge Mechanism<\/a><\/div>\n<div class=\"gt-faq-item\"><strong>What is Input Tax Credit (ITC) in Zoho Books?<\/strong><\/p>\n<p>Input Tax Credit (ITC) is the GST paid on business purchases that you can offset against GST collected on sales, reducing your net cash GST payment. Zoho Books captures ITC automatically from vendor bills and tracks CGST, SGST, and IGST ITC separately.<\/p>\n<\/div>\n<div class=\"gt-faq-item\"><strong>How does Zoho Books track Input Tax Credit?<\/strong><\/p>\n<p>Every vendor bill with a valid GSTIN automatically captures ITC in separate asset accounts. The GST Summary report shows total ITC available, ITC reversed, and net ITC for each GSTR-3B filing period.<\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Input Tax Credit (ITC) in Zoho Books is the GST paid on business purchases that you are entitled to recover by offsetting\u2026<\/p>\n","protected":false},"template":"","meta":{"seo_title":"Input Tax Credit (ITC) | Zoho Books Glossary","seo_description":"Input Tax Credit (ITC) in Zoho Books is the GST paid on purchases that can be offset against GST collected on sales. Learn how Zoho Books tracks and reconciles ITC.","seo_keyword":"input tax credit itc zoho books","seo_faqs":"[{\"q\": \"What is Input Tax Credit (ITC) in Zoho Books?\", \"a\": \"Input Tax Credit (ITC) in Zoho Books is the GST you pay to vendors on purchases that you can claim as a credit to offset against the GST you collect from customers on sales, reducing your net GST cash payment to the government.\"}, {\"q\": \"How does Zoho Books track Input Tax Credit?\", \"a\": \"Every vendor bill you record in Zoho Books with a valid GSTIN automatically captures the ITC: CGST ITC, SGST ITC, and IGST ITC are posted to separate asset accounts. The GST Summary report shows total ITC available, ITC reversed, and net ITC for set-off in each GSTR-3B filing period.\"}]","term_type":"Business","glossary_related":"","glossary_links":""},"glossary_category":[1246],"class_list":["post-4203","glossary","type-glossary","status-publish","hentry","glossary_category-zoho-books"],"_links":{"self":[{"href":"https:\/\/aaxonix.com\/resources\/wp-json\/wp\/v2\/glossary\/4203","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/aaxonix.com\/resources\/wp-json\/wp\/v2\/glossary"}],"about":[{"href":"https:\/\/aaxonix.com\/resources\/wp-json\/wp\/v2\/types\/glossary"}],"wp:attachment":[{"href":"https:\/\/aaxonix.com\/resources\/wp-json\/wp\/v2\/media?parent=4203"}],"wp:term":[{"taxonomy":"glossary_category","embeddable":true,"href":"https:\/\/aaxonix.com\/resources\/wp-json\/wp\/v2\/glossary_category?post=4203"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}