GST
Input Tax Credit
Definition
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What is Input Tax Credit?
Input Tax Credit (ITC) is a mechanism that allows businesses to claim credit for the GST paid on purchases (inputs) against the GST liability on sales (outputs). This prevents tax-on-tax or cascading effect, ensuring that tax is only paid on value addition. ITC can only be claimed if the supplier has filed their GSTR-1 return and the purchase invoice details appear in the buyer's GSTR-2B.
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