{"id":14479,"date":"2020-08-07T18:46:16","date_gmt":"2020-08-07T13:16:16","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=14479"},"modified":"2024-07-02T17:31:22","modified_gmt":"2024-07-02T12:01:22","slug":"input-tax-credit-under-gst","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/input-tax-credit-under-gst\/","title":{"rendered":"What is Input Tax Credit under GST?"},"content":{"rendered":"\n<p class=\"has-drop-cap\">GST also is known as Goods and Services Tax, which is considered one of the most significant reforms that happened in India. Yet, one thing that is the discussion point is that the mechanism of input Tax credit under GST. <\/p>\n\n\n\n<p>In simple form, Input Tax Credit means at the time of paying tax on sales, and you can decrease the taxes that you have already paid on purchases of the goods and services. <\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/input-tax-credit-under-gst\/#Update_as_per_the_latest_changes_related_to_Input_Tax_Credit_under_GST\" >Update as per the latest changes related to Input Tax\nCredit under GST<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/input-tax-credit-under-gst\/#What_is_the_Input_Tax_Credit\" >What is the Input Tax Credit?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/input-tax-credit-under-gst\/#Input_Tax_Credit_under_GST\" >Input Tax Credit under GST<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/input-tax-credit-under-gst\/#How_to_claim_Input_Tax_Credit_under_GST\" >How to claim Input Tax Credit under GST?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/input-tax-credit-under-gst\/#Type_of_Taxes_under_GST\" >Type of Taxes under GST<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/corpbiz.io\/learning\/input-tax-credit-under-gst\/#How_to_gain_Input_Tax_Credit_under_GST\" >How to gain Input Tax Credit under GST?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/corpbiz.io\/learning\/input-tax-credit-under-gst\/#How_Input_Tax_Credit_works_Under_GST\" >How Input Tax Credit works Under GST?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/corpbiz.io\/learning\/input-tax-credit-under-gst\/#How_to_apply_for_the_Input_tax_credit_under_GST\" >How to apply for the Input tax credit under GST?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/corpbiz.io\/learning\/input-tax-credit-under-gst\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Update_as_per_the_latest_changes_related_to_Input_Tax_Credit_under_GST\"><\/span>Update as per the latest changes related to Input Tax\nCredit under GST<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img decoding=\"async\" width=\"606\" height=\"369\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/08\/image-29.png\" alt=\"Input Tax Credit under GST\" class=\"wp-image-14480\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/08\/image-29.png 606w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/08\/image-29-300x183.png 300w\" sizes=\"(max-width: 606px) 100vw, 606px\" \/><\/figure><\/div>\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_the_Input_Tax_Credit\"><\/span>What is the Input Tax Credit?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Input Tax Credit states that at the time of paying tax on output of products, and you can decrease the tax that you have already paid on inputs of the products.<\/p>\n\n\n\n<p><strong><em>Assume that you are a manufacturer of goods and services \u2013<\/em><\/strong><\/p>\n\n\n\n<ul>\n<li>Tax payable on the FINAL\nPRODUCT is INR 450<\/li>\n\n\n\n<li>Tax paid on PURCHASES is INR\n300<\/li>\n\n\n\n<li>You can claim the INPUT TAX\nCREDIT of INR 300, and you only need to deposit INR 150 in tax.<\/li>\n<\/ul>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/how-to-save-income-tax\/\">A Complete Guide on How to Save Income Tax<\/a><\/mark><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Input_Tax_Credit_under_GST\"><\/span>Input Tax Credit under GST<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Input Tax Credit Mechanism is available to you when you are covered under the <strong>GST Act<\/strong>. This means if you are a manufacturer of products, suppliers of products, agents of selling or purchaser of products, e-commerce operator for product distribution registered under GST, You are eligible to claim Input Tax Credit for tax paid by you on your purchases.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_to_claim_Input_Tax_Credit_under_GST\"><\/span>How to claim Input Tax Credit under GST<strong>?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong><em>To claim Input Tax Credit under GST \u2013<\/em><\/strong><\/p>\n\n\n\n<ul>\n<li>It would be of help if you had a tax invoice (of purchase) or debit note issued by the registered dealer of goods and services;<\/li>\n<\/ul>\n\n\n\n<p>Where goods are received in installments, then the credit will be available against the tax invoice issued upon receipt of the last payment of the installment.<\/p>\n\n\n\n<ul>\n<li>You should have received the\ngoods\/services<\/li>\n<\/ul>\n\n\n\n<p>Where the recipient does not pay the value of service or tax thereon within three months of issuing of the invoice, and he has already availed Input Tax Credit created on the invoice of the said goods, the given credit will be added to the output tax liability along with interest of the Goods and Services.<\/p>\n\n\n\n<ul>\n<li>The tax that is charged upon the purchases has been deposited or paid to the government by the supplier in cash or via claim the input Tax Credit;<\/li>\n\n\n\n<li>The supplier has <a href=\"https:\/\/corpbiz.io\/gst-return-filing\"><strong>filed GST returns<\/strong><\/a>.<\/li>\n<\/ul>\n\n\n\n<p>Possibly the most path-breaking reform of GST is that Input Tax Credit is only allowable if your provider has deposited the tax, he collected from you. So, every Input Tax Credit you are claiming shall be matched and validated before you can claim it.<\/p>\n\n\n\n<p><em>Therefore, to allow you to claim Input Tax Credit on Purchases, all your suppliers must be GST compliant as well. There\u2019s more you should know about Input Tax Credit <\/em><\/p>\n\n\n\n<ul>\n<li>There is a possibility to have available Input Tax Credit due to tax on purchases being higher than the tax on the sale. In these types of cases, the tax is allowed to be carry forwarded or claim a refund on those ITC.<\/li>\n<\/ul>\n\n\n\n<ol>\n<li>If a tax on inputs is greater than tax on output, then it is equal to carry forward input tax or claim refund on ITC<\/li>\n\n\n\n<li>If tax on output is greater than tax on inputs, then it is equal to pay balance on ITC<\/li>\n\n\n\n<li>No interest is paid on input tax credit balance by the government.<\/li>\n<\/ol>\n\n\n\n<ul>\n<li>The input tax credit can\u2019t be\ntaken on purchase invoices for goods and services that are more than one year\nold. The period of one year is calculated from the date of issuing of the tax\ninvoice.<\/li>\n\n\n\n<li>Meanwhile, GST is charged on\nboth goods and services, Input Tax Credit can be availed on both products and\nservices (except those who are on the exempted\/negative list).<\/li>\n\n\n\n<li>The input tax credit is\npermitted on capital goods also.<\/li>\n\n\n\n<li>Input Tax Credit is not permitted\non goods and services for personal use.<\/li>\n\n\n\n<li> No input tax credit shall be allowed after GST return has been filed for September following the end of the fiscal year to which such invoice pertains or filing of relevant annual return, whichever is earlier. <\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Type_of_Taxes_under_GST\"><\/span>Type of Taxes under GST<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>All existing taxes such as VAT, CST, Excise Duty, Service\nTax, Entertainment Tax shall go away, and GST will replace them.<\/p>\n\n\n\n<p><em><strong>There are three categories of taxes under GST-<\/strong><\/em><\/p>\n\n\n\n<ul>\n<li>SGST\n\u2013 State GST<\/li>\n\n\n\n<li>CGST\n\u2013 Centre GST<\/li>\n\n\n\n<li>IGST\n\u2013 Integrated GST<\/li>\n<\/ul>\n\n\n\n<p>Now let\u2019s understand how INPUT TAX CREDIT works under GST<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_to_gain_Input_Tax_Credit_under_GST\"><\/span>How to gain Input Tax Credit under GST?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong><em>To Avail Input Tax Credit under GST-<\/em><\/strong><\/p>\n\n\n\n<ul>\n<li>To pay IGST-Input Tax Credit is taken from CGST, SGST &amp; IGST paid on purchases<\/li>\n<\/ul>\n\n\n\n<ul>\n<li>To pay CGST- Input Tax Credit is taken from CGST &amp; IGST paid on purchases<\/li>\n<\/ul>\n\n\n\n<ul>\n<li>To pay on SGST-Input Tax Credit\nis taken from SGST &amp; IGST paid on purchases<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_Input_Tax_Credit_works_Under_GST\"><\/span>How Input Tax Credit works Under GST?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Suppose Mrs. X is a seller of goods and services. She sells goods to Mr. Y. The buyer, Mr. Y is now entitled to claim the purchase credit using her purchase invoices for goods and services.<\/p>\n\n\n\n<ul>\n<li>Upload all the tax invoices details\nas per the&nbsp; GSTR-1 form.<\/li>\n\n\n\n<li>The specifics uploaded by Mrs.\nX is routinely populated or reflected in the GSTR-2A form. The same data will\nget reflected when Mr. Y files the form GSTR-2 returns, which the details of\nthe purchase of the goods and services.<\/li>\n\n\n\n<li>The details of the sale are\naccepted and acknowledged by Mr. Y. Then, the purchase tax is credited to Mr.\nY&#8217;s &#8216;Electronic Credit,&#8217; which can be used to adjust it afterward for future\noutput tax liability and can also receive a refund.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_to_apply_for_the_Input_tax_credit_under_GST\"><\/span>How to apply for the Input tax credit under GST?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>For the inter-state supply of goods and services, IGST is charged.<\/p>\n\n\n\n<p>And for the intra-state supply of goods and services, CGST and SGST or UTGST are charged.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Input Tax Credit Mechanism is available to you when you are covered under the GST Act. This means if you are a manufacturer of products, suppliers of products, agents of selling or purchaser of products, e-commerce operator for product distribution registered under GST, You are eligible to claim Input Tax Credit under GST for tax paid by you on your purchases. <\/p>\n\n\n\n<p> Our <a href=\"https:\/\/corpbiz.io\"><strong>Corpbiz<\/strong><\/a> group shall be at your disposal if you seek expert advice on any aspect related to <a href=\"https:\/\/corpbiz.io\/gst-registration\"><strong>GST Registration<\/strong><\/a> along with complete compliance. We will help you ensure full compliance concerning all the demand based on your anticipated activities ensuring the productive and well-timed completion of your expectation.  <\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/cbdt-extended-the-filing-of-itr-deadline-till-30th-september\/\">CBDT extended the Filing of ITR deadline till 30th September<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>GST also is known as Goods and Services Tax, which is considered one of the most significant reforms that happened in India. Yet, one thing that is the discussion point is that the mechanism of input Tax credit under GST. In simple form, Input Tax Credit means at the time of paying tax on sales, [&hellip;]<\/p>\n","protected":false},"author":18,"featured_media":14483,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[16],"tags":[852],"acf":{"service_id":"334"},"authorName":"Sakshi Srivastava","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/03\/IMG-20180130-WA0007.jpg","authorDescription":"Sakshi has pursued B.B.A.LL.B.(IPR Hons.). She is an avid reader and is keen to gather and share her knowledge on the subjects relating to IPR, Company Law and GST. Priorly she has worked as a legal researcher and vide her articles she aims at improving the core knowledge of the subjects to the masses.","postViews":10146,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/14479"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/18"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=14479"}],"version-history":[{"count":7,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/14479\/revisions"}],"predecessor-version":[{"id":65114,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/14479\/revisions\/65114"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/14483"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=14479"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=14479"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=14479"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}