Input Tax Credit in GST: How to claim ITC and other key things to know for small businesses

Input Tax Credit Claim in GST: The input tax credit (ITC) has been one of the key highlights of the Goods and Services Tax (GST) launched in the country as a major reform to the tax structure. It allows businesses to reduce their tax burden and save money to invest in business growth. According to the Central Board of Indirect Taxes and Customs (CBIC), ITC is a mechanism to avoid the “cascading of taxes” or “tax on tax.”

Before GST, credit of taxes being levied by the central government was not available as a set-off for payment of taxes levied by state governments, and vice versa. However, with GST, as the tax charged by the central or the state governments are part of the same tax regime, credit of tax paid at every stage is available as a set-off for payment of tax at every subsequent stage.

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