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Claiming ITC (input tax credit) refers to claiming the credit of taxes paid on an entity’s inward supplies, which are used to carry out business. The main aim behind the introduction of GST was to avoid the cascading effect of taxes. Section 16 of the Central Goods and Services Tax (CGST) Act lays down the conditions for ITC, along with certain provisions and restrictions.
The mechanism of ITC allows the businesses to reduce their output tax liability by claiming credit of taxes already paid on their purchases. Thus, claiming maximum ITC is important to reduce the output tax liability and reduce overall working capital impact.
Here are Seven ways to claim maximum ITC under GST-
Claiming ITC under GST is time-bound. Section 16(4) lays down the maximum time limit in which a taxpayer can claim ITC. As per this section, a registered taxpayer can claim ITC on an invoice or debit note of inward supply.