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GST Blocked Credit and Margin Impact Calculator

GST credit is usually treated as neutral to cost, but every rupee that cannot be claimed becomes cost. This calculator shows how blocked or ineligible credit eats margin and whether credit accumulates faster than you can use it.

Your numbers

Rs
Rs

Labour, power and overhead with no GST credit effect.

Rs
10 %

Examples: Section 17(5) items, credit not on GSTR-2B, ITC reversed under Rule 42 or 43.

Your results

Margin after blocked credit
Rs 137,400
Margin percent
13.7%
GST paid on inputs
Rs 126,000
Claimable ITC
Rs 113,400
Blocked credit added to cost
Rs 12,600
True cost of goods sold
Rs 862,600
Output GST on sale
Rs 180,000
Credit left over after output tax (lock-up)
Rs 0

Single-product model. Real credit blocking is decided invoice by invoice; consult your adviser for Section 17 treatment.

Save results:

Margin percent as more input GST is blocked

Sweeps Share of input GST that is blocked or ineligible from 0 to 100, holding your other inputs fixed.

Catch blocked credit at posting time

Optional: ask about matching purchase invoices to GSTR-2B inside your ERP.

Optional. The tool and every export work without this. No spam.

How to use the calculator

Enter the purchase cost of inputs, their GST rate, other costs, selling price and output GST rate. Then set the share of input GST that you cannot claim. The tool shows the true cost, margin and the credit left over after output tax. The chart sweeps the blocked share from zero to full, so you can see how fast margin falls and test the effect of fixing vendor compliance.

Where blocked credit comes from

Credit can be lost for several reasons. Section 17(5) blocks goods such as motor vehicles for ordinary use, food and club memberships. Credit does not appear on GSTR-2B if the supplier fails to file, and Section 16(4) bars claims after the statutory time limit. Inputs used for exempt supplies need reversal under Rule 42 and 43. Each of these converts tax into cost.

  • Section 17(5) blocked categories
  • Supplier did not file or report the invoice
  • Claim made after the Section 16(4) deadline
  • Proportional reversal for exempt supplies
  • Payment beyond 180 days

Worked example

A product has Rs 7 lakh of inputs at 18 percent, so Rs 1.26 lakh GST. If 10 percent is blocked, Rs 12,600 turns into cost. With Rs 1.5 lakh of conversion cost, true cost is Rs 8.626 lakh against a Rs 10 lakh price, a margin of 13.7 percent instead of the 15 percent shown when all credit is claimed. Output tax of Rs 1.8 lakh exceeds claimable credit, so there is no lock-up.

How to use the result

Use the margin line to decide which vendors to chase and which purchases to restructure. If lock-up is non-zero, check whether your product is in an inverted duty position and whether a refund route exists. Feed the blocked percentage into your costing runs so standard cost reflects reality.

Frequently Asked Questions

Is blocked ITC always a loss?

For Section 17(5) items yes, it is permanent cost. For credit missed because a supplier has not filed, it can often be claimed later if the supplier files and you are inside the time limit. Chasing vendors early recovers much of it.

What is credit lock-up?

It is credit that sits in the ledger because your output tax is smaller than the credit you generate. It ties up working capital and, in inverted duty cases, may be refundable. The last output of this tool estimates the lock-up per product.

Should standard cost include blocked GST?

Yes. If a category of purchases is consistently blocked, add the unclaimable GST to the cost of the item so pricing and margin reports show the real figure.

Can I model several products at once?

This tool is single-product. Run it per product family, or use the worksheets elsewhere on this site to roll up many lines in Excel.

We can help match supplier invoices against GSTR-2B inside your ERP so blocked credit is found at posting time, not at return time.

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