In this article
To claim input tax credit on an electrical purchase you need a valid tax invoice carrying both GSTINs, the correct HSN, the correct place of supply and the correct tax split; the supplier must actually have filed it so that it appears in your GSTR-2B; and you must have paid him within 180 days. A wrong place of supply is the failure we see most, and it is discovered months after it is free to fix.
None of this is exotic. It goes wrong because the invoice is generated at the end of a process where nobody was checking, and because the error is invisible until reconciliation.
The conditions, in order
1. You have a valid tax invoice or debit note. Not a proforma, not a delivery challan, not a quotation. The tax invoice.
2. You have actually received the goods. Credit is taken against receipt, not against payment or against the invoice date. For goods delivered in instalments, credit comes on the last one.
3. The supplier has declared it and it appears in your GSTR-2B. This is the condition that has hardened over the last few years, and it is the one entirely outside your control. If your supplier does not file, your credit does not exist, however perfect your invoice is.
4. The tax has actually been paid to the government. Which follows from the above.
5. You have filed your own return.
6. You pay the supplier within 180 days. Miss this and the credit reverses with interest. Partially paid invoices reverse proportionally.
The order matters because it tells you where to look when something is missing. If the credit is not showing, it is almost always condition three.
The invoice fields that decide it
| Field | Why ITC depends on it | The common error |
|---|---|---|
| Supplier GSTIN | Identifies who collected the tax | Trade name on the invoice, different entity on the GSTIN |
| Your GSTIN | Identifies who may claim it | Missing entirely on smaller suppliers’ invoices |
| Invoice number and date | The reference that must match GSTR-2B | Manual series with duplicates, or a revised invoice issued without cancelling the first |
| HSN code | Determines rate and classification | Copied from a similar item; inferred from a description |
| Place of supply | Determines whether it is IGST or CGST+SGST | Billing address used when goods went to a site in another state |
| Tax split and rate | The amount you are claiming | Right total, wrong split — which fails reconciliation even though the money is correct |
| Taxable value | The base | Freight and other charges handled inconsistently between quotation and invoice |
If you only ever check two of these, check place of supply and HSN.
Place of supply, properly
This is the field that causes the most damage in our trade, because electrical goods so often go to a site rather than to the buyer’s office.
The rule for goods, in the ordinary case, is that the place of supply is where the movement of goods terminates for delivery to the recipient. That is the site. Not your registered office, not your billing address, unless they happen to be the same place.
Get it wrong and the tax is charged under the wrong head — IGST where it should have been CGST plus SGST, or the reverse. The total may look right on the invoice. It will not reconcile, and correcting it means going back to a supplier you may have no open business with, several months after the fact.
There is a second case worth knowing: goods delivered to a third party on your instruction — a common arrangement when you are supplying a client’s site directly. The treatment is different and it is worth a specific conversation with your CA if you do this regularly, because plenty of firms in this trade handle it by instinct and get it wrong.
The practical rule: check place of supply on the proforma invoice, before the tax invoice is raised. That is the only point in the chain where fixing it costs nothing.
Where ITC is blocked
Some electrical spend does not carry credit however perfect the paperwork.
The main one for our customers is the works contract and immovable property restriction. Credit on goods and services used for construction of immovable property on your own account is blocked, and “construction” includes reconstruction, renovation, addition and repair to the extent it is capitalised. Where this bites in electrical work is the line between plant and building — a machine is plant, the wiring embedded into the building fabric may not be, and the answer depends on facts rather than on the invoice.
This is genuinely contested ground with a long history of litigation, and it is the part of this article where “ask your CA” is not a disclaimer but the actual advice. What you should not do is assume the position that suits you and discover otherwise in an assessment.
The other restrictions — motor vehicles, personal consumption, goods lost, stolen, destroyed or written off, and anything used for exempt supplies — are more clear-cut and less likely to come up in ordinary component purchasing.
When the supplier hasn’t filed
Your invoice is perfect, the goods arrived, and the credit is not in your 2B. This is now the most common ITC problem in the country and there is a sequence for it.
Check the invoice details against 2B first — the credit may be there under a slightly different invoice number or in a different period than you expected.
If it is genuinely absent, contact the supplier and ask when he filed. The most frequent innocent explanation is a filing-period mismatch: he filed it, but late, and it will appear in a later 2B. That resolves itself.
If he has not filed at all, you are in a commercial negotiation rather than a tax problem. You have his money and he has your credit. The leverage you have is whatever payment is still outstanding, which is a good argument for not clearing the last tranche until the credit appears — and a good argument for knowing your supplier before the first order rather than after.
Keep the correspondence. If this ends up in an assessment, contemporaneous evidence that you chased the supplier is worth having.
The two fields buyers let slide
Place of supply and HSN, and both go wrong for the same reason. Somebody filled in the billing address out of habit while the goods went to a site in another state, and somebody copied an HSN from a similar-looking item because the description seemed close enough.
Both are thirty-second errors. Both are discovered months later during reconciliation, by which time getting a revised invoice out of a supplier you no longer have an open order with is a project rather than a phone call.
Check them on the proforma. Before payment, before dispatch, before the tax invoice exists. That is the whole trick and it is not a sophisticated one.
A short checklist for your purchase team
Before releasing payment against any proforma:
- Supplier GSTIN present and active on the portal
- Your GSTIN present and correct
- Place of supply matches where the goods are actually going
- HSN present on every line
- Tax split consistent with the place of supply
- Freight treatment matches what was quoted
Six checks, two minutes, on a document you are already reading before you pay.
Related reading: How to read a switchgear quotation · How to verify an electrical supplier · The real cost of running procurement on WhatsApp
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