sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
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
Latest Expert Exchange
Service Tax »
 Should you use home sale value to get tax break
 Auction of Government of India Dated Securities November 12, 2018
 Auction for Sale (Re-issue) of Government Stock (GS) November 12, 2018
 How can I save tax on gains made on selling a shop a
 Here's is a quick guide to how you can save tax on gifts
 Don't buy life insurance just for saving tax, ask these 4 questions before investing
 E-tailers caught between state laws & penalty on tax
  Central Goods and Services Tax (Eleventh Amendment) Rules, 2018
 Central Goods and Services Tax (Twelfth Amendment) Rules, 2018
 The Central Goods And Services Tax (Amendment) Act, 2018
  How much tax are you liable to pay on long-term capital gains on property?

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 2018 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