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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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  7. 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.
  8. Want to know about ITC on Amalgamation/merger/transfer of business? Read about it here.
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  12. Input Service Distributor under GST and related laws have been kept aligned to continue the existing position and continue all the benefits available
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