Glossary · GST & Indirect Tax
ITC
Input Tax Credit — the GST paid on inputs and input services that a taxpayer can claim as a credit against his output GST liability.
ITC is one of the cornerstones of GST — it eliminates tax-on-tax. To claim ITC, the supplier must have uploaded the matching invoice to the GSTN, the recipient must have filed his return, and the tax must be reflected in GSTR-2B. Blocked credits under Section 17(5) include food and beverages, club membership, motor vehicles (in some cases), and personal consumption. ITC must be reversed if the supplier does not pay it to the government.
Examples
A manufacturer pays ₹18,000 GST on raw materials and ₹18,000 on the finished product. He can claim ₹18,000 ITC, paying only the net ₹18,000 to the government.