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What is Input Tax Credit

Harbour Creation 2 (30 Points)

20 May 2021

What is Input Tax Credit. Can anyone tell me what is the definition of ITC and explain ITC

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8 Replies

CA Altamush Zafar (GST Consultant) (15918 Points)
Replied 20 May 2021

Credit on cgst, sgst, IGST paid on your purchases is input tax credit

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Harbour Creation 2 (30 Points)
Replied 20 May 2021

I want more explanation

CA Altamush Zafar (GST Consultant) (15918 Points)
Replied 20 May 2021

I suggest you search articles on the subject. Detailed explanation not possible on forum. Or you can read extracts of the law.
Section 16-18 of cgst act will help you understand the concepts

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Harbour Creation 2 (30 Points)
Replied 20 May 2021

Ok tnx

Lotus Agrawal (Practice) (1356 Points)
Replied 20 May 2021

Refer section 2(62) and 2(63).

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Harbour Creation 2 (30 Points)
Replied 20 May 2021

Ok tnx

CA. Sourav Sarkar (Chartered Accountant ) (24578 Points)
Replied 20 May 2021

ITC is the tax that a business pays on a purchase and that it can use to reduce its tax liability when it makes a sale. In other words, businesses can reduce their tax liability by claiming credit to the extent of GST paid on purchases. Goods and Services Tax (GST) is an integrated tax system where every purchase by a business should be matched with a sale by another business. This makes flow of credit across an entire supply chain a seamless process.

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sabyasachi mukherjee (26219 Points)
Replied 21 May 2021

Input tax credit as the word specifies is a benefit available to a regular dealer but not in case of a composition dealer.
It reduces the tax liability for gst paid on inputs and sets off for the same against output tax liability.
Eligibility conditions:
1.available to a regular dealer.
2. it's available to a taxable seller in case the supply made by the seller is in the course of furtherance of business.
3. cannot be adjusted in export sale.

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