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What is Input Tax Credit ?

Input credit means at the time of paying tax on output, you can reduce the tax you have already paid on inputs. Say, 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 CREDIT of Rs 300 and you only need to deposit Rs 150 in taxes.

Who is eligible for input tax credit?

A registered person (including an Input Service Distributor) can claim Input tax credit on the strength of the following conditions: a) He must possess a Tax invoice issued by the supplier of goods or services or both or Debit note issued by a supplier b) He must have received supply of goods or services or both

What is the benefit of input tax credit?

Input credit means at the time of paying tax on output, you can reduce the tax you have already paid on inputs and pay the balance amount. When you buy a product/service from a registered dealer you pay taxes on the purchase. On selling, you collect the tax.

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