GST- India

1
INPUT TAX CREDIT (ITC)

• As GST is a single tax levied across India (right
  from manufacture of goods/ services till it
  reaches the end customer), the chain does not get
  broken and everybody is able to take benefit of
  the same and there is seamless flow of credit.
• Meaning
• Input Tax Credit refers to the tax already paid
  by a person at time  of purchase of goods or
  services and which is available as deduction from
  tax payable .

2

• Input Tax Credit means claiming the credit of the
  GST paid on purchase of Goods and Services which
  are used for the furtherance of business. The
  Mechanism of Input Tax Credit is the backbone of
  GST and is one of the most important reasons for
  the introduction of GST.
• Input tax 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

3

• When you buy a product/service from a registered
  dealer you pay taxes on the purchase. On selling,
  you collect the tax. You adjust the taxes paid at
  the time of purchase with the amount of output
  tax (tax on sales) and balance liability of tax
  (tax on sales minus tax on purchase) has to be
  paid to the government. This mechanism is called
  utilization of input tax credit.

4
(No Transcript)
5
Who can claim ITC?

• ITC can be claimed by a person registered under
  GST only if he fulfils ALL the conditions as
  prescribed.
• a. The dealer should be in possession of tax
  invoice
• b. The said goods/services have been received
• c. Returns have been filed.
• d. The tax charged has been paid to the
  government by the supplier.
• e. When goods are received in installments ITC
  can be claimed only when the last lot is
  received.
• f. No ITC will be allowed if depreciation has
  been claimed on tax component of a capital good
• A person registered under composition scheme in
  GST cannot claim ITC.

6
How ITC AllowedgtgtCredit of CGST Allowed
1st for payment of CGST and the balance can be
utilised for the payment of IGST. Credit of CGST
is not allowed for payment of SGST.gtgtCredit of
SGST/ UTGST Allowed 1st for payment of
SGST/UTGST and the balance can be utilised for
the payment of IGST. Credit of SGST/ UTGST is not
allowed for payment of CGST.gtgtCredit of IGST
Allowed 1st for payment of IGST, then for payment
of CGST and the balance for payment of SGST/
UTGST.
Credit of To be utilised 1st for the payment of Maybe utilised further for the payment of
CGST CGST IGST
SGST/UTGST SGST/ UTGST IGST
IGST IGST CGST, then SGST/ UTGST
7
(No Transcript)
8

• IGST
  CGST SGST
• Tax Payable 10,000 8,000
  5,000
• Input Tax Credit 12,000 7,500
  1,200

IGST CGST SGST
Tax Payable 10,000 8,000 5,000
Less Input Tax Credit of IGST from IGSTCGST from CGST and SGST from SGST(up to maximum of tax payable) 10,000 7,500 1,200
                                        Gross  Tax Payable NIL 500 3,800
Less Input Tax Credit of Remaining IGST of Rs. 2,000from CGST first and then SGST 500 1.500
                                        Net Tax Payable 2,300
9
Composition scheme

• Businesses with an annual aggregate turnover up
  to Rs.1.5 crore can opt into the composition
  scheme.
• The turnover of all businesses with the same PAN
  has to be added up to calculate the turnover for
  the purpose of the composition scheme.

10

• Thank You
• By
• Rajesh Jaiswal
• Associate Professor
• Dated 28/04/2022