News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
« Service Tax »
 Offer income tax benefits on Senior Citizens Savings Scheme, urges SBI Research
 Paying your income tax may soon become as easy as swiping a card at a shop
 In income tax rule change, govt considers tweaking dividend distribution tax
 No documents are needed to file ITR for agricultural income below ?5 lakh
 Introduced in 2017, the Goods and Services tax (GST) is a destination based consumption tax subsuming in itself, the erstwhile taxes like sales tax, service tax, excise etc. Under the GST
 Income Tax alert! Last date to do this work is October 31, check all details here
 Income tax on gains from stocks, equity mutual funds set to be revamped
 You can save tax on up to Rs 17,000 savings account interest: Here's how
  Communication to the Central Excise/Service Tax Taxpayers on migration to GST
 Don’t let the tax scrutiny spoil happy returns
 Government launches Faceless e-assessment scheme for taxpayers

Pay tax once on the input, deduct it from the output
June, 26th 2017

Input tax credit is among the features of the upcoming GST regime. Input Tax Credit prevents the cascading of taxes as it will be in effect across goods and services at every stage of supply. Cross-utilisation of input credit of one component of tax against the other is allowed except for utilisation of credit of CGST for SGST, and vice versa.

At the time of paying tax on the “final product” or “output product”, a registered taxpayer can deduct the tax amount that HE OR SHE has already paid while purchasing the raw material that went into that product. The tax amount so deducted is called the input tax credit, which is effective for the services sector too. Input tax credit is among the features of the upcoming GST regime. Consider, for example, the case of a company selling a smartphone, and that the tax payable comes to Rs 5,000. The company had bought a small camera as raw material for the smartphone, and paid a tax of Rs 500 on the purchase.

It is this Rs 500 that is called the input tax credit, which will be deducted from the tax of Rs 5,000 on the output product, so that the tax being paid while selling the smartphone is Rs 4,500.

Just like income tax refund, the input tax will be credited automatically into the company’s account.

Under the GST law, however, such a company would get the input tax credit only when four conditions are followed. One, the company must have either a “tax invoice” or a “debit note” that was given by the supplier who sold the raw material. Two, the company must have received the raw material. Three, the supplier of the raw material must have deposited with the government the Rs 500 tax paid by the purchaser. Four, the supplier must have filed its GST returns with the government.

Input Tax Credit prevents the cascading of taxes as it will be in effect across goods and services at every stage of supply.

Cross-utilisation of input credit of one component of tax against the other is allowed except for utilisation of credit of CGST for SGST, and vice versa. For example, input tax credit of CGST is allowed only for the payment of CGST and IGST.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2019 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Multi-level Marketing MLM India Affiliate Marketing Affiliate Marketing Software MLM Software MLM Solutions Multi level marketing solutions MLM Servi

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions