As one of the main USPs, i.e. smooth payment transfer across the GST system, the input tax credit may be assumed to be one of the primary aspects of the overall Goods and Service Tax (GST) structure. Owing to the non-availability of credit at different points in the supply chain, the present indirect taxation mechanism suffers from cascading fiscal impact. Under the GST system, however, GST credit is required to be available across the entire supply chain at any point. Input credit ensures you may reduce the tax you have already charged on goods at the point of payment. Let's look at the input tax credit under GST with examples and other details such as pre-requirements and documentations involved.
To be eligible for the input tax credit under the GST system the following requirements must be met:
If you are eligible, then check out the input tax credit under GST with this example:
Consider a manufacturer X,
Let the tax payable on output ie., the final product = Rs.500;
Tax paid on input ie., the purchase = Rs 380;
Thus, X can claim the input tax credit of Rs 380 and he/she only has to pay Rs 120 for taxes.
The Central Board of Indirect Tax and Customs (CBIC) has updated a complete input tax credit under GST pdf in their portal. You can refer to it for in-depth information.
To assert input tax credit under GST each claimant may need the following documents:
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