Managing Input Tax Credit (ITC) for every purchase can become repetitive, especially when you regularly purchase from the same vendors.

With Refrens, you can now set a vendor's default ITC eligibility and have it automatically applied to new purchases.

You can still change the ITC for a specific expenditure or individual line item whenever an exception is needed.

This makes purchase entry faster while giving you control over cases where the ITC treatment is different.

What is the ITC default feature?

The feature lets you manage ITC eligibility at three levels:

1. Vendor level – Set the usual ITC eligibility for a vendor.
2. Expenditure level – Change the default for a particular purchase.
3. Line-item level – Override the ITC for a specific item when required.

The available ITC options are:

• Eligible
• Ineligible (Composition Scheme)
• Ineligible (Others)

This means you can keep your usual ITC treatment as a default while still handling exceptions without changing the vendor's settings.

Step 1: Set the default ITC for a vendor

You can save the ITC eligibility that normally applies to a particular vendor.

1. Go to Vendors & Suppliers.
2. Open an existing vendor or click Add Vendor.
3. Go to Tax Information.
4. Find Default ITC.
5. Select one of the following:
6. • Eligible
   • Ineligible (Composition Scheme)
   • Ineligible (Others)
6. Save the vendor.

Why is this useful?
If you regularly purchase from a vendor and the same ITC treatment applies to most of your purchases, you don't need to select the ITC eligibility every time.

What happens if you don't set a vendor default?
If the vendor's default ITC is left unset, Refrens treats the default as Eligible for new purchases.

Step 2: Create a purchase for the vendor

When you create a new purchase for a vendor, Refrens uses the vendor's ITC default for the purchase.

For example:
Vendor default: Eligible

When you create a new purchase for this vendor, the expenditure default will start as Eligible.

This saves you from repeatedly selecting the same ITC option for every purchase.

Step 3: Change the ITC for a particular line

Sometimes a purchase may contain an item that needs different ITC treatment from the rest of the purchase.

You can manually change the ITC eligibility for that particular line.

For example:

• Vendor default: Eligible
• Expenditure default: Eligible
• Line 1: Eligible
• Line 2: Ineligible (Others)

In this case, Line 2 becomes an override. If the expenditure default is changed later, Line 2 will retain its manually selected ITC eligibility.

This is useful when a single item needs different treatment without changing the default for the entire purchase.

Change the ITC default from Purchase Review

You don't have to go back to the purchase edit screen if you realize that the ITC default needs to be changed while reviewing a purchase.

1. Open the purchase.
2. Open Purchase Payment Records if required to reach the purchase details.
3. Open Advanced Settings.
4. Find Default ITC configuration for all items.
5. Select the required ITC eligibility.
6. Save the purchase.

The same control is available while editing the purchase, so you can manage the expenditure default from either the edit screen or review screen.

How ITC inheritance and overrides work

Refrens distinguishes between a value that a line inherits from the expenditure default and a value that was manually selected for that line.

Example

Suppose your expenditure default is: Eligible

You have three lines:

Now you change the expenditure default to: Ineligible (Composition Scheme)

The result will be:

The inherited lines follow the new expenditure default, while the manually overridden line stays unchanged.

=> Even selecting the same value manually creates an override:

For example, if the expenditure default is Eligible and you manually select Eligible on one line, that line is still treated as an explicit override.
If you later change the expenditure default to Ineligible (Others), that manually selected line will remain Eligible.

What happens when you change the vendor?

If you change the vendor while creating a purchase, Refrens updates the inherited ITC values according to the new vendor's default.

However, existing explicit choices are preserved.

For example:
Vendor A default: Eligible
Vendor B default: Ineligible (Others)

If you change the purchase from Vendor A to Vendor B:

• The inherited expenditure default changes to Ineligible (Others).
• Lines inheriting the expenditure default also change.
• A manually overridden line keeps its existing ITC selection.

This prevents a vendor change from unexpectedly overwriting deliberate ITC choices.

What about older purchases?

This feature does not rewrite existing purchase data.

For purchases created before this feature:

• Changing the expenditure default will not automatically change their existing line-level ITC values.
• Existing blank ITC values remain blank.
• Existing stored ITC values remain unchanged.
• Newly added lines can use the current expenditure default.
• You can still deliberately change an individual line.

This is important for businesses with historical purchase records because enabling or using the new defaults won't unexpectedly alter previously recorded transactions.

ITC defaults with OCR, CSV and API purchases

The same defaulting logic is also applied when creating new purchases through:

• OCR
• CSV import
• Public API

If an ITC value is not provided, Refrens uses the applicable default.

If an ITC value is explicitly provided, that choice takes priority.

For OCR-created purchases, Refrens does not infer an ITC eligibility from the text extracted from the document.

Why use ITC defaults?

Setting ITC defaults can help businesses:

• Save time by avoiding repetitive ITC selections.
• Reduce manual errors when recording frequent purchases.
• Maintain consistent ITC treatment for regular vendors.
• Handle exceptions easily at the line-item level.
• Review and correct ITC defaults before finalizing a purchase.
• Keep historical purchase data unchanged when introducing new defaults.

In case you need further assistance, reach out to us on live chat support or drop an email at care@refrens.com.

Updated on: 08/10/2026