GST Input Tax Credit

Input Tax Credit

 

Input tax credit means while paying GST for the particular period, you have to reduce the GST input tax against output tax, which you have already paid on purchases or services received.

 

When you purchase goods or services from a registered dealer then you have to pay tax called input tax and you collect the tax, when you sale of goods to a registered dealer called output tax.

 

You have to adjust the input tax, which you have already paid on purchases against liability of tax (Output tax – Input tax) and the remaining balance has to be paid to the Government.

 

Example for understanding of Input tax credit

 

Total tax paid on purchases is Rs. 2,000

 

Total tax collected on sales is Rs. 3,000

 

Tax to be paid is Rs. 1,000 (Output tax – Input tax) 

 

 

Input Tax Credit Claim

 

Any registered dealer under GST can claim the input tax credit as mentioned below.

 

1.The dealer should have GST Invoice

 

2.Dealer has been received goods or services

 

3.GST Returns should be filed

 

4.Supplier has been paid tax on supplied goods or services

 

5.Partial delivery: ITC can be claimed when the total goods have been delivered

 

6.Capital goods: as per the GST no ITC can be claimed on capital goods

 

 

Any registered dealer under GST composition scheme cannot be claim ITC.

 

 

Note: ITC not applicable in case of any goods or services used for personal use and exempt supplies.