EaseValueMost businesses treat the GST on their purchase invoices as money in the bank. It is on the invoice, the supplier has been paid, and the accounts carry it as recoverable. The reality is that a meaningful share of it — frequently a fifth, sometimes very much more — is not credit at all, and a further share is credit that belongs to you in principle but is not in your ledger and may never arrive. This page runs the whole waterfall and tells you what is left. It removes the blocked categories first, because that credit was never available: motor vehicles and the insurance and servicing that go with them, food and beverages and catering, club and gym membership, employee travel benefits, and above all works contract services and the construction of immovable property on your own account, which is the largest single blocked item for anyone who has fitted out premises. It then applies the apportionment where inputs are used partly for exempt supplies or non-business purposes. Both of those are permanent. What survives is then tested against two conditions, and the first of them is the reason this page exists. Your credit is conditional on the invoice appearing in the statement auto-populated from what your supplier filed. You can hold a perfectly valid tax invoice, have taken delivery, and have paid the supplier in full including the tax — and still not be entitled to the credit, because they did not file their return. The tax has left your bank account. It has not reached the government. And the loss is yours, not theirs. The second condition is the reversal that bites where you have not paid a supplier the value of the supply together with the tax within the prescribed period: the credit you already took is added back to your liability with interest, and comes back only when you actually pay. This calculator quantifies each of those in rupees — what is gone for good, what is hostage to somebody else's filing, what has to be reversed until you pay — shows what the leakage costs you in cash this year against what you would have paid if every invoiced rupee were creditable, and puts a financing cost on the credit that is out of your hands. Because credit sitting in a ledger you cannot spend from is not an asset. It is a loan you have made to the government, at nil interest, for an unknown term.
How it’s calculated
- Enter your outward taxable turnover for the year, excluding GST, and the average rate you charge on it. Together these give your output tax, which is the liability your credit is set against. Leave exempt and nil-rated supplies out of this box; there is a separate input below for the exempt share, because what matters about exempt supplies is that they restrict your credit, not that they generate output tax.
- Enter the total GST charged to you by suppliers for the year. This is the tax component, not the invoice value. Add up the tax on stock, raw materials, packing, rent, professional fees, software subscriptions, freight, telephone, bank charges and equipment. Include tax you paid yourself under reverse charge on notified inward supplies, because that is creditable too once it has actually been paid in cash. This is the gross figure everyone quotes, and the rest of the page is about how much of it you really get.
- Enter the tax falling in the blocked categories. Go through the year properly rather than guessing, because this item is more often under-identified than over-identified. Look for a company car and its insurance and servicing; staff meals, client entertainment and outdoor catering; club and fitness membership; employee life and health cover you were not legally obliged to provide; travel benefits for employees on leave; any works contract or construction work on your own premises; goods lost, damaged, written off or given away as gifts and free samples; and anything used personally by the proprietor or directors.
- Before you accept that figure, check the carve-outs. A dealer in motor vehicles, a transporter, a driving school, or a business supplying the same category onward is generally not blocked at all. Businesses write off credit they were entitled to keep by reading the blocked list too broadly, and the error is as expensive as the opposite one.
- Enter the share of your supplies that are exempt or non-business use. Where an input is used partly for taxable supplies and partly for exempt or non-business purposes, only the taxable proportion is creditable. Be careful here: exports and supplies to special economic zones are zero-rated, not exempt. They do not restrict credit, and including them in this box destroys credit you were entitled to keep.
- Enter the share of your input tax on invoices your suppliers have not filed. Do not guess this one either. Get the real figure by reconciling your purchase register against the statement auto-populated from supplier filings; anything that does not reconcile is your money at risk. The default on this page is a placeholder, not a statistic, and the whole value of the page depends on you replacing it with your own number.
- Enter the tax on supplier invoices you have not paid within the prescribed period, and set the period in the box beside it. The period is set by rule and has been amended, which is why it is an editable input carrying a commonly used default rather than a hard-coded figure. Confirm the number in force rather than relying on it.
- Set your cost of capital and how many months credit that is stuck, disputed or in surplus stays out of your hands. This converts a ledger balance into a financing cost, which is the part of a credit problem that never appears in the accounts and is often the largest part of it.
- Read the verdict row first. It gives the percentage of the tax your suppliers charged you that reaches you as usable credit, and it names the causes separately — what is gone for good, what waits on your suppliers filing, and what comes back only when you pay them. Those three are very different problems and conflating them is how businesses mis-manage this.
- Read the gone for good row and the yours in principle row together. The first is cost and should be recognised as cost from the day the invoice arrives. The second is timing, and it is actionable: chase the filing, pay the supplier, get it back.
- Read the cash row. It shows the GST you must actually pay this year, and beside it how much more that is than you would have paid if every invoiced rupee were creditable. That difference is the price of the leakage, in cash, in the current year.
- Read the working-capital row. Credit that is stuck, hostage or in surplus is money you have paid out and cannot use. At your own cost of capital and holding period, this puts a number on it — and if you carry a surplus, check whether you are in one of the situations where a refund is available rather than an indefinite carry-forward.
- Read the waterfall table to see where every rupee went, in the order the conditions actually bite. It also tells you when a figure you entered has been capped, so nothing is clamped silently.
- Read the three coloured boxes last. The first covers the supplier-filing dependency and what to do about it commercially. The second covers blocked credits and apportionment, including the carve-outs worth checking. The third covers the payment reversal and the working-capital position, including when a refund is available instead of a carry-forward.
Credit is a conditional entitlement, not an asset you already own
The mental model most businesses carry is that GST paid on purchases is recoverable, and the only question is when. That model is wrong in a way that costs real money, because input tax credit is not a right that attaches to the tax you paid. It is a conditional entitlement, and the conditions are cumulative: fail any one of them and the credit does not arise, however genuine the purchase and however completely you paid for it.
The conditions fall into two groups, and keeping them apart is the single most useful discipline in managing this. The first group goes to entitlement. Some credit is denied outright because of what was bought, and some is apportioned away because of what it was used for. Neither is recoverable at any point, by any action, and both should be recognised as cost the moment the invoice arrives. Carrying them on the balance sheet as recoverable overstates your assets and, worse, distorts every purchasing decision you make while they sit there.
The second group goes to timing and conduct. You must hold a valid tax invoice. You must have received the goods or services. The tax must actually have reached the government, which in practice means your supplier must have filed. You must pay your supplier within the prescribed period. And the credit must be taken before the annual cut-off, after which it is barred no matter how valid it was. Credit in this group is yours in principle, but it is not in your ledger until the condition is satisfied, and some of it will never get there.
The distinction matters because the two groups call for completely different responses. Permanent loss is a pricing and budgeting problem: if the tax on a purchase is never coming back, then the tax-inclusive figure is the real price, and comparing it net against a creditable alternative will mislead you every time. Deferred credit is an operations and cash-flow problem: chase the supplier, chase the filing, pay the invoice, reconcile monthly, and finance the gap in the meantime.
Businesses that get this wrong tend to get it wrong in one of two directions and both are expensive. Some treat all input tax as recoverable, budget net of it, and discover the shortfall as a cash surprise at the year end. Others treat anything that looks doubtful as lost, and write off credit they were entitled to keep — usually by reading the blocked list too broadly, or by counting zero-rated exports as exempt supplies. The purpose of this page is to separate the two properly, in rupees, on your own figures.
The supplier-filing dependency: your credit, their behaviour
This is the condition that generates the most anger, and reasonably so. Your entitlement to credit depends on the invoice appearing in the statement auto-populated from what your supplier filed. Not on whether you have a valid invoice. Not on whether you received the goods. Not on whether you paid, in full, including the tax. On whether somebody else did their paperwork.
Consider what that means in practice. You buy stock. The supplier issues a proper tax invoice. You take delivery, you pay the whole amount including the tax, and you record the credit. The supplier then does not file. Your credit does not exist. The tax has left your bank account, it has not reached the government, and the difference is your loss. You may of course sue the supplier, and businesses occasionally do, but a supplier who cannot file a return is usually not a supplier from whom money can be recovered.
The scale of this is easy to underestimate because it accumulates quietly. A five percent non-filing rate sounds trivially small. On a business paying nine lakh of input tax a year it is forty-five thousand rupees, every year, disappearing into a gap between what you paid and what you can claim. At ten percent it is ninety thousand. And the distribution is not even: it clusters among small suppliers, new suppliers, and suppliers in difficulty, which is exactly where a business under cost pressure tends to go looking for a better price.
Four responses actually work, and none of them is technical. The first is to reconcile monthly rather than annually. This is the whole of it, really. A supplier who has missed one month can usually be chased into filing; a supplier who has been missing for a year very often cannot, and by then the annual cut-off for claiming the credit may also be in play. The monthly reconciliation is tedious and it is the highest-return half-hour in the finance function.
The second is to hold back the tax rather than the price. Where a supplier has a filing record you do not trust, the commercially sensible arrangement is to pay the value of the supply and release the tax component once the invoice appears. It is not unusual, it is not aggressive, and it converts your exposure into their incentive. The third is to put an indemnity in the contract for credit lost through the supplier's default. This is ordinary commercial drafting, it costs nothing to include, and it changes the conversation entirely when something goes wrong. The fourth is simply to concentrate purchases on suppliers who file. A supplier quoting two percent cheaper who costs you ten percent of the tax is not cheaper, and once you can see the number you can make that trade-off deliberately rather than by accident.
One risk profile deserves separate mention because it recurs: a large payment near the year end to a new supplier. There is no filing history to judge them on, the amount is material, and there is very little time left to chase before the cut-off. If there is one transaction pattern to apply the tax-holdback to, it is that one.
Blocked credits: the tax that is cost from the day it is invoiced
A defined list of purchases carries no credit at all. Not deferred, not conditional — denied, however genuine the expense and however plainly commercial its purpose. Understanding this list changes purchasing decisions, and not understanding it produces both over-claims that get recovered with interest and under-claims that quietly cost money.
The recurring items are these. Motor vehicles for passenger transport below the seating threshold, together with their insurance, servicing and repairs. Food and beverages, outdoor catering, health services, beauty treatment and cosmetic surgery. Club, health and fitness centre membership. Rent-a-cab, life insurance and health insurance, except where an employer is obliged by law to provide it. Travel benefits given to employees on leave. Works contract services and goods or services used for the construction of immovable property on one's own account, even where the property is used entirely for business. Goods lost, stolen, destroyed, written off or given away as gifts or free samples. Anything used for personal consumption. And tax paid on account of fraud, confiscation or detention.
The construction item is the one that costs the most, and it surprises businesses every time. A company builds or fits out an office. The building is used wholly for the business. Every rupee of it is commercial. And the tax on the works contract, on the materials, on the fit-out, is blocked. On a substantial project this is a large number, and it should be in the capital budget from the first estimate rather than discovered afterwards. A fit-out quoted at a figure plus tax costs the full tax-inclusive amount, and comparing it against a creditable alternative on a net basis will mislead you by the whole of the tax.
That is the general lesson from this list, and it is a pricing lesson rather than a compliance one. For a blocked purchase the tax-inclusive price is the real price. A registered supplier and an unregistered one quoting the same gross figure are, on a blocked category, offering you the same deal — which is not true anywhere else in the tax. Buying decisions made on net figures across a mixed basket will be systematically wrong.
The carve-outs deserve as much attention as the list, because reading it too broadly is a real and common error. A dealer in motor vehicles is not blocked on the vehicles they deal in. Nor is a transporter, nor a driving school, nor a business supplying the same category onward. An employer legally obliged to provide a facility is generally not blocked on it. Businesses write off credit they were entitled to keep on all of these, and nobody comes to tell them.
The apportionment for exempt and non-business use operates alongside the blocked list and produces a similar permanent loss. Where an input serves both taxable and exempt supplies, only the taxable share is creditable. Exempt supplies are the awkward case, because they carry no output tax: they neither justify the credit nor generate a liability against which the remainder could be used. And here too there is an expensive misreading to avoid — exports and supplies to special economic zones are zero-rated, not exempt. They do not restrict credit at all, and in fact credit attributable to them may be refundable. Treating them as exempt destroys credit twice over.
A closing warning on direction of error. Blocked credit taken in error is worse than blocked credit never taken: it is recoverable from you with interest and penalty, and it is one of the easier things to pick up on examination, because the expense description usually gives it away. A line reading "staff Diwali party" or "office interior work" invites exactly the question you do not want asked.
The reversal when you have not paid your supplier
This condition is straightforward to state and is overlooked with remarkable regularity. If you do not pay your supplier the value of the supply together with the tax within the prescribed period from the date of the invoice, the credit you have already taken must be added back to your output liability, and interest runs on it. You may take the credit again once you actually pay, so it is not lost outright — but the interest is, and it is not refunded when the credit comes back.
What makes this dangerous is that it converts an ordinary commercial decision into a tax exposure without anybody noticing. Stretching creditors is a normal cash-flow tactic. In most contexts it costs nothing beyond goodwill and perhaps a late-payment charge. Here it costs interest on tax, and the decision to stretch is usually taken by someone managing cash rather than by someone tracking credit.
It also surfaces late, which compounds the cost. The typical discovery is at the year end, when somebody finally runs the creditors ageing against the credit register and finds that credit taken eight months ago should have been reversed five months ago. Interest has been running the whole time. The reversal is then made, the interest is paid, and the credit is reclaimed when the supplier is eventually paid — a sequence that costs money and consumes professional time for no benefit whatever.
Two habits prevent it entirely. Run an ageing report against the prescribed period rather than against your own payment terms, and treat that date as a hard marker in the payables calendar rather than a guideline. And where a payment is genuinely disputed and will not be made soon, reverse the credit voluntarily and early. This feels counter-intuitive, because you are giving up credit you believe you are entitled to. But the credit comes back when the dispute settles and you pay, whereas the interest for having held it too long does not. Reversing early is strictly cheaper than being made to reverse late.
The period itself is set by rule and has been amended, which is why this page exposes it as an editable input carrying a commonly used default rather than asserting a figure. Confirm the number currently in force. It is also worth noting what the condition requires: payment of the value of the supply together with the tax. A part payment does not satisfy it, and a payment of the value while withholding the tax — which is precisely the tax-holdback tactic recommended earlier against non-filing suppliers — does not satisfy it either. The two techniques are in tension, and if you use the holdback you should be tracking those invoices against the reversal deadline deliberately rather than hoping the two problems cancel out.
A rupee of credit is not a rupee of cash
The last thing this page prices is the one that never appears in the accounts at all. Credit sitting in your ledger looks like an asset. It says nothing about when, or whether, you will be able to spend it, and the gap between those two things is a financing cost you are paying whether or not you have measured it.
Input tax credit is, with limited exceptions, a set-off rather than a refund. It reduces tax you owe. If you do not owe enough tax, it sits there. A business whose inputs are taxed more heavily than its outputs, or which is building stock, or which is investing in equipment, can accumulate a substantial credit balance while paying suppliers real money for it. That balance is not a windfall; it is money paid out and not yet recovered, and the cost of carrying it is your own cost of capital multiplied by the time it sits.
There is a second constraint that catches businesses out and is not modelled on this page. Credit sits in separate heads — central, state and integrated tax — and there are rules about the order in which they may be used against each other. It is entirely possible to pay tax in cash under one head while holding an unusable surplus under another. Any business with a material credit balance should be looking at the head-wise position rather than the single net figure, because the net figure can conceal exactly the problem it appears to rule out.
Where a surplus is genuine, the first question is whether a refund is available rather than an indefinite carry-forward. It is, in particular situations: on zero-rated supplies such as exports and supplies to special economic zones, and where an inverted duty structure means your inputs bear a higher rate than your outputs. Both are common and both are frequently left unclaimed by businesses that assume a credit balance simply has to be carried. Refund claims are time-limited, so an unclaimed refund eventually becomes a permanent loss by inaction alone — which is the cheapest kind of money to lose and the most annoying.
There is also an annual cut-off after which credit relating to an earlier year can no longer be taken at all. This page does not model it, because it depends on your own filing dates, but it is the reason the monthly reconciliation habit matters so much. A supplier chased in month two files and you get your credit. The same supplier noticed fourteen months later may leave you outside the window even if they then file, and at that point a timing problem has silently become a permanent one.
The general point is worth carrying beyond this page. Businesses that plan cash on the assumption that credit is as good as money get caught, and they get caught at the worst moment — a heavy purchasing quarter, a period of investment, a year when output is low and inputs are high. Credit is usable only against a matching liability, only in the right head, only once every condition is met, and only within the window. Everything else is a receivable of uncertain term from a debtor you cannot chase.
What this calculator assumes, and what it leaves out
The waterfall runs in the order the conditions actually bite, and the order matters to the result. Blocked categories come out first, because that credit was never available at all. The exempt and non-business apportionment comes off what remains. The supplier-filing condition is then applied to the eligible remainder, and the reversal for non-payment is taken last, limited to credit that survived the earlier steps. Sequencing it this way avoids double-counting: an invoice in a blocked category cannot also be at risk on filing, because there was no credit on it to be at risk.
Two inputs are capped where they exceed what is available, and in both cases the page says so on the face of the table rather than clamping silently. Blocked credit above your total input tax is capped at that total. Unpaid-invoice tax above the credit that survived the earlier steps is capped at what survived. If you see either note, the figure you entered is inconsistent with the others and is worth revisiting rather than accepted.
Several things are deliberately not modelled, and they are listed rather than left to be discovered. The annual cut-off after which credit for a past year can no longer be claimed is not applied, because it turns on your own filing dates — but it means credit shown here as merely at risk can become permanently lost with the passage of time. The head-wise ordering of central, state and integrated tax credits is not modelled, and it can leave you paying cash under one head while holding a surplus under another. Refunds of accumulated credit on zero-rated supplies and under an inverted duty structure are described but not computed. Capital-goods credit spread over time, transitional provisions, job-work provisions, and interest and penalty on credit wrongly availed are all outside the model.
On the figures that are asserted rather than computed: the prescribed payment period, the exempt share, the non-filing share, the output and input figures, the cost of capital and the holding period are all editable inputs carrying defaults. The non-filing default in particular is a placeholder and not a statistic — the page is worth very little until you replace it with a figure taken from your own reconciliation. The payment period is set by rule and has been amended; confirm the figure in force. The blocked-category list is described in the field hints and the sections above to help you classify your own expenditure, and it should be checked against the provisions in force and against your own facts, particularly the carve-outs.
On terminology, this page describes the GST provisions in words rather than by section number — the blocked-credit rules, the input tax credit conditions, the apportionment for exempt and non-business use, the reversal for non-payment. That is a considered choice. A calculator that cites a provision inaccurately is worse than one that describes it correctly without a citation, and nothing here is made less usable by the omission.
A final word on how to read the output. The percentage in the verdict is the headline, but the three causes beneath it are what you act on. Permanent loss is a pricing problem and the response is to budget gross. Credit hostage to supplier filing is an operations problem and the response is a monthly reconciliation and, where needed, a tax holdback. Credit awaiting payment is a treasury problem and the response is an ageing report run against the right date. Three different numbers, three different owners in the business, three different fixes — and a single blended figure hides all of that, which is why this page refuses to give you one.
Frequently asked questions
My supplier did not file their return. Why is that my problem?
Because input tax credit is conditional on the invoice appearing in the statement auto-populated from what your supplier filed. Not on whether you hold a valid tax invoice, not on whether you received the goods, and not on whether you paid in full including the tax. You can have done everything correctly and still have no credit, because somebody else did not do their paperwork. The tax has left your bank account, it has not reached the government, and the shortfall is yours. You can sue, and businesses occasionally do, but a supplier who cannot file a return is usually not one from whom money can be recovered. The practical answers are commercial rather than technical: reconcile monthly rather than annually, because a supplier missing for one month can usually be chased and one missing for a year often cannot; hold back the tax component until the invoice appears where a supplier's filing record is doubtful; put an indemnity in the contract; and concentrate purchases on suppliers who file. A supplier quoting 2% cheaper who costs you 10% of the tax is not cheaper.
Which purchases carry no credit at all?
The recurring blocked categories are motor vehicles for passenger transport below the seating threshold, with their insurance, servicing and repairs; food and beverages, outdoor catering, health services, beauty treatment and cosmetic surgery; club, health and fitness centre membership; rent-a-cab, life and health insurance except where an employer is legally obliged to provide it; travel benefits given to employees on leave; works contract services and goods or services used for constructing immovable property on your own account, even where the property is used wholly for business; goods lost, stolen, destroyed, written off or given away as gifts or free samples; anything for personal consumption; and tax paid on account of fraud, confiscation or detention. The construction item is the largest for most businesses and the most surprising — a fit-out used entirely for the business still carries no credit. Check the carve-outs before writing anything off, though: a dealer in motor vehicles, a transporter, a driving school or anyone supplying the same category onward is generally not blocked at all, and credit gets discarded by reading the list too broadly.
I have a large credit balance. Is that a good thing?
Not usually. Input tax credit is, with limited exceptions, a set-off rather than a refund — it reduces tax you owe, and if you do not owe enough tax it simply sits there. A balance is money you have paid your suppliers and not yet recovered, and carrying it costs you your own cost of capital for as long as it sits. Two things are worth checking. First, whether a refund is available rather than an indefinite carry-forward: it is on zero-rated supplies such as exports and supplies to special economic zones, and where an inverted duty structure means your inputs bear a higher rate than your outputs. Refund claims are time-limited, so an unclaimed one eventually becomes a permanent loss through inaction alone. Second, check the head-wise position — credit sits separately in central, state and integrated tax, with rules about the order in which they may be used, so it is entirely possible to be paying cash under one head while holding an unusable surplus under another. A single net figure conceals exactly that problem.
What happens if I do not pay a supplier on time?
If you do not pay the value of the supply together with the tax within the prescribed period from the invoice date, the credit you already took is added back to your output liability and interest runs on it. You may take the credit again once you actually pay, so it is not lost outright — but the interest is, and it is not refunded when the credit returns. What makes this dangerous is that stretching creditors is a normal cash-flow tactic taken by someone managing cash, not by someone tracking credit, so it turns into a tax exposure without anyone noticing. It also surfaces late: the classic discovery is at the year end, finding that credit taken eight months ago should have been reversed five months ago with interest running throughout. Two habits prevent it. Run your ageing report against the prescribed period rather than your own payment terms. And where a payment is genuinely disputed and will not be made soon, reverse the credit voluntarily and early — reversing early is strictly cheaper than being made to reverse late. Note the tension with the tax-holdback tactic against non-filing suppliers: withholding the tax while paying the value does not satisfy this condition, so those invoices need tracking against both deadlines.
Are my exports exempt supplies for the purposes of the apportionment?
No, and this is an expensive and very common misreading. Exports and supplies to special economic zones are zero-rated, not exempt. Zero-rated supplies do not restrict your credit at all, and credit attributable to them may in fact be refundable. Exempt supplies are a different thing: they carry no output tax and they do restrict credit, because only the taxable proportion of an input is creditable. So if you have included exports in the exempt share on this page, reduce it — you are destroying credit you were entitled to keep, and possibly forgoing a refund on top. The apportionment applies where inputs are used partly for exempt supplies or for non-business purposes, and exempt supplies are the difficult case precisely because they neither justify credit nor generate a liability for the rest of it to be set against.
How much credit does a typical business actually lose?
There is no honest typical figure, which is why every input on this page is yours to set rather than a number invented on your behalf — and why the non-filing default is a placeholder, not a statistic. What can be said is the shape of it. Permanent losses from blocked categories depend entirely on what you buy, and they spike in any year involving premises work, because works contract and construction on your own account is blocked in full. Losses from supplier non-filing accumulate quietly and cluster among small, new and struggling suppliers — exactly where a business under cost pressure goes looking for a better price. A five percent non-filing rate sounds trivial and is forty-five thousand rupees a year on nine lakh of input tax; ten percent is ninety thousand. The way to replace guesswork with a real number is to reconcile your purchase register against the auto-populated statement, monthly. That reconciliation is tedious and it is the highest-return half-hour in a small finance function.
I claimed credit on something that turns out to be blocked. What now?
Correct it, and correct it early. Blocked credit taken in error is worse than blocked credit never taken: it is recoverable from you with interest and penalty, and it is among the easier things to identify on examination because the expense description usually gives it away — a line reading "staff Diwali party" or "office interior work" invites exactly the question you do not want asked. Reversing it voluntarily before it is raised is materially cheaper than having it found. Before you reverse, though, check the carve-outs, because the error runs in both directions: a dealer in motor vehicles, a transporter, a driving school, a business supplying the same category onward, or an employer legally obliged to provide a facility is generally not blocked at all. It is worth being right rather than merely cautious, because credit given up unnecessarily is real money and nobody comes to tell you about it.
Why does this page charge a working-capital cost on credit that I am going to get eventually?
Because you have already paid that money to your supplier and you cannot use it yet, and money you have paid out and cannot use has a cost whether or not anyone measures it. A credit balance looks like an asset on the face of the ledger and says nothing about when you will be able to spend it. If you are financing your business on an overdraft, the credit stuck in the ledger is money you are borrowing against at your overdraft rate; if you are not, it is money that could have been earning. The page applies your own cost of capital over your own holding period to three things: credit hostage to suppliers who have not filed, credit reversed pending payment, and any surplus with no liability to be set against. The wider point is worth carrying: a rupee of credit is not a rupee of cash. It is usable only against a matching liability, only in the right tax head, only once every condition is met, and only within the window before the annual cut-off. Businesses that plan cash as though credit were money get caught, and they get caught in exactly the quarter when it hurts most.
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