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Input Tax Credit is the soul of GST. The reason behind the same is that, in the GST era, businesses will be allowed avail ITC across the state's borders and can be used to meet the output tax liability. This requires businesses to attach extra care towards input tax calculation. Availing the right ITC will ensure that the working capital of the business is maintained properly, and also help to maintain the credibility of the business.
Under GST, the taxes applicable are CGST, SGST/UTGST & IGST.
For all such transactions, whenever a business pays a particular tax, the appropriate amount will get apportioned to the respective electronic ledger, which can then be used to meet the future tax liability.
In order to calculate input tax credit, the following rules need to be adhered to:
Old ITC Set-off order
New ITC Set-off order from April 2019
Input tax credit |
IGST Output liability |
CGST Output liability |
SGST Output liability |
IGST |
(I) |
(II) – In any order in any proportion |
|
(III) Input tax credit on account of Integrated tax to be completely exhausted mandatorily |
|||
CGST |
(V) |
(IV) |
Not allowed |
SGST/UTGST |
(VII) |
Not permitted |
(VI) |
With the new rule, the IGST credit needs to be completely utilised before offsetting it with CGST or SGST. The order of setting off ITC of IGST can be done in any proportion and any order towards setting off the CGST or SGST output after utilising the same for IGST output.
Know More about ITC
Input Tax Credit, Reversal of Input Tax Credit, Eligible ITC under GST, GST ITC-04, ITC Utilization in GST
GST
GST Software, GST Calculator, GST Exempted Goods & Services, GST Rates, HSN Codes, SAC Codes, GST State Codes, New GST Returns & Forms, Sahaj GST Returns, Sugam GST Returns
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