Input set off

Before GST, the "set-off" of input taxes was siloed. CENVAT credit allowed set-off only against central excise or service tax liabilities, while VAT input credit allowed set-off only against state VAT liabilities. The inability to cross-utilize these credits between central and state taxes was a major reason for the "cascading effect" that GST was designed to eliminate through its unified, seamless input tax credit mechanism.