GST

Input Tax Credit (ITC)

The credit a business claims for GST paid on its purchases, set off against the GST it collects on sales.

Input Tax Credit (ITC) is the mechanism that prevents tax-on-tax under GST. A business pays GST on its purchases (input tax) and collects GST on its sales (output tax); it pays the government only the difference, claiming credit for the input tax.

ITC is conditional: the supplier must have actually reported the invoice, the goods or services must be received, and the credit must not be blocked or restricted. Reconciling purchases against the auto-drafted GSTR-2B is how businesses protect their eligible ITC.

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