GST - INPUT TAX CREDIT

 


What is Input Tax Credit under GST & How to claim it?


A significant change that GST introduced was the mechanism of input tax credit under GST.

Here’s a quick check on what can you expect from this article:
  • For beginners – Don’t worry if you have never heard of ‘input tax credit’ before. We’ll start from scratch.
  • For businesses – If you are a business, you may have already heard of VAT input credit, and you will soon know how it differs from GST input tax credit.
  • AVAILING INPUT TAX CREDIT - For people who can impactable factor under GST

Latest Updates

1st February 2022
Budget 2022 updates-
1. ITC cannot be claimed if it is restricted in GSTR-2B available under Section 38.
2. Time limit to claim ITC on invoices or debit notes of a financial year is revised to earlier of two dates. Firstly, 30th November of the following year or secondly, the date of filing annual returns.
3. Section 38 is completely revamped as ‘Communication of details of inward supplies and input tax credit’ in line with the Form GSTR-2B. It lays down the manner, time, conditions and restrictions for ITC claims and has removed the two-way communication process in GST return filing on the suspended return in Form GSTR-2. It also states that taxpayers will be provided information of eligible and ineligible ITC for claims.
4. Section 41 is also revamped to remove the references to provisional ITC claims and prescribes self-assessed ITC claims with conditions.
5. Sections 42, 43 and 43A on provisional ITC claim process, matching and reversal are eliminated. 

29th December 2021
CGST Rule 36(4) is amended to remove 5% additional ITC over and above ITC appearing in GSTR-2B. From 1st January 2022, businesses can avail ITC only if it is reported by the supplier in GSTR-1/ IFF and it appears in their GSTR-2B.

21st December 2021
From 1st January 2022, ITC claims will be allowed only if it appears in GSTR-2B. So, the taxpayers can no longer claim 5% provisional ITC under the CGST Rule 36(4) and ensure every ITC value claimed was reflected in GSTR-2B.

What is input tax credit?

Input tax credit means at the time of paying tax on output, you can reduce the tax you have already paid on inputs.

Suppose you are a manufacturer – 

  • Tax payable on output (final product) is Rs 450
  • Tax paid on input (purchases) is Rs 300
  • You can claim input tax credit of Rs 300, and you need to pay only Rs 150.

input tax credit

Input tax credit in GST

Input tax credit mechanism is available to you when you are covered under the GST Act. Which means if you are a manufacturer, supplier, agent, e-commerce operator, aggregator or any of the persons mentioned, registered under GST, you are eligible to claim input tax credit for tax paid by you on your purchase



Comments

Post a Comment

Popular posts from this blog

HOW TO CLAIM AND AVAIL INPUT TAX CREDIT

Image
  How to claim input tax credit under GST? To claim input tax credit under GST – You must have a  tax invoice (of purchase), or debit note  issued by registered dealer You should have  received   the goods/services Note: Where goods are received in lots/instalments, credit will be available against the tax invoice upon receipt of last lot or installment. Note: Where recipient does not pay the value of service or tax thereon within 3 months of issue of invoice and he has already availed input tax credit based on the invoice, the said credit will be added to his output tax liability along with interest. The  tax charged on your purchases  has been  deposited/paid  to the government by the supplier in cash or via claiming input tax credit Supplier has filed GST returns Supplier has uploaded the invoice in their GSTR-1 , and it appears in GSTR-2B of the recipient or buyer. Possibly the most path-breaking reform of GST is that input tax cred...
Read more