In this answer, I will explain to you everything about input tax credit: what is an input tax credit, who is eligible for the Input tax credit, its rules and conditions, and how Input credit tax is claimed under GST.
Input tax credit meaningThe tax paid by the businessmen at the time of stock purchase, which can reduce its tax liability at the time of selling the product to the customers is known as Input Tax Credit.
In simple terms, the tax which is already paid by businessmen at the time of purchasing the product will get him back at the time of selling. For example, before selling the goods, a businessman has to purchase stock from someone. At the time of purchasing that stock, he will pay the tax as output tax and at the time of reselling the product to his customers, the tax he will charge on that product is called an input tax credit.
The function of Input credit taxFor example,
The MRP of merchandise product is Rs. 2000 on which a businessman charges 18% tax as GST the total amount paid by a customer will be Rs. 2360. From the selling price, you can deduct the amount you have paid as tax at the time of stock purchase.
Now let us assume that the wholesale price of merchandise product is 600 and you have paid 108 rupees as GST to the wholesaler, therefore, you can now deduct the tax amount paid to the wholesaler from the tax amount your customer will pay which 360-108= 252 this is the amount you need to pay it to the government as tax this is called Input Credit Tax.
According to Sec 16 Of the CGST Act, every registered taxpayer is eligible for input credit tax.
What is Input Tax Credit?
Deepankar
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2021-03-17T12:05:48+00:00 2021-04-15T16:05:40+00:00Comment
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