One of the fundamental features of GST is the seamless flow of input credit across the chain (from the manufacture of goods till it is consumed) and across the country.

input tax credit

 

When you buy a product/service from a registered dealer you pay taxes on purchase, while making sales, tax is collected and periodically the same is adjusted with the tax you already paid at time of purchase and balance liability of tax (tax on sales (minus) tax on purchase) is to be paid to the government. This mechanism is called utilisation of input tax credit(tax on purchase adjustment against tax liability on output i.e. sales).

The law has laid down conditions to avail GST input tax credit on supply of goods or services. All of the following conditions need to be satisfied to avail GST Input credit:

  • The dealer should be in possession of Tax Invoice / Debit or Credit Note / Supplementary Invoice issued by a supplier registered under GST Act.
  • The said goods/services have been received.
  • Returns (GSTR-3) have been filed.
  • The tax charged has been paid to the government by the supplier.

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  1. The distribution of ITC by Input Service Distributor has very specific rules under GST. Know more about the process and conditions for ITC distribution.
  2. There are certain cases when ITC under GST cannot be availed. like the supply of life and health insurance. These cases are mentioned in the CGST Act.
  3. Treatment of ITC on Transfer of Business is different than the regular ITC. Form GST ITC-02 has to be submitted in case of amalgamation.
  4. Want to know about ITC on Amalgamation/merger/transfer of business? Read about it here.
  5. Know all about the forms and documents required for filing for ITC under GST
  6. Situations where input tax credit can not be availed
  7. Input Credit Helps in Determining the Correct Amount of Working Capital at any Given Point of Time. This is Highly Critical Information from Business Liquidity Standpoint. Read more here
  8. Input Service Distributor under GST and related laws have been kept aligned to continue the existing position and continue all the benefits available
  9. Input credit on job work can be claimed if goods are returned in 6 months. Under GST, there is sufficient limit for goods to be returned from job work.
  10. Who is a 'Taxable Person' under GST? Learn all About the Types of Taxable Persons and Provisions for Each Under the GST Law.
  11. Understanding the mechanism around input credit in GST.