Company

Input Tax Credit (ITC) is a mechanism that allows businesses to offset the tax paid on purchases against the tax they collect on sales. Under the Goods and Services Tax (GST) system, a registered business can claim credit for the tax paid on inputs (purchases) and reduce it from the output tax liability (sales tax). This system eliminates tax cascading, making the taxation system more efficient and helping businesses save on taxes.

What is Input Tax Credit (ITC)?

Input Tax Credit (ITC) refers to the credit businesses receive for the taxes paid on the purchase of goods and services. It is essentially a way to avoid paying tax on tax. When a business purchases goods or services, it pays GST on them. ITC allows the business to claim a credit for this tax paid, which can be used to offset against the GST payable on sales.