Input tax credit allocation rules require prorating credit between business, exempt and non-business uses, with annual reconciliation. Input tax credit is apportioned by partitioning total input tax into exclusive non-business, exclusive exempt, non-creditable and supplies-other-than-exempt components to compute ledger credit C1; remaining common credit C2 is prorated so exempt-attributable D1 is (exempt turnover / total turnover)xC2, non-business D2 equals five percent of C2, and eligible business credit C3 equals C2 minus D1 and D2, with invoice-level declaration in FORM GSTR-2 and annual finalisation requiring reconciliation and adjustment to output liability or credits.