SimerpreetHelpful In: 4. Taxes & Duties > GST What is input tax credit example? What is input tax credit example? Share Facebook You must login to add an answer. Username or email* Password* Captcha* Remember Me! Forgot Password? Need An Account, Sign Up Here 1 Answer Voted Recent Rahul_Jose Aspiring CA currently doing Bcom 2021-12-12T21:46:22+00:00Added an answer on December 12, 2021 at 9:46 pm This answer was edited. Under GST, Input Tax Credit (ITC) refers to the tax already paid by a person on input, which is available as a deduction from tax payable on output. This means that if you have paid tax on some purchases, then at the time of paying tax on the sale of goods, you can reduce it by the amount you already paid on purchase and pay only the balance amount. EXAMPLE Suppose Ashok purchased goods worth Rs 100 while paying tax at 10%, that is Rs 10. He now sold the goods for Rs 200, with a tax payable of Rs 20. Now, Ashok can avail input tax credit of Rs 10 that he already paid for the purchase and hence the net tax payable is Rs 10 (20-10). METHOD OF UTILISATION OF ITC The central government collects CGST, SGST, UTGST or IGST based on whether the transactions are done intrastate or interstate. The amount of input tax credit on IGST is first used for paying IGST and then utilised for the payment of CGST and SGST or UTGST. Similarly, the amount of ITC relating to CGST is first utilised for payment of CGST and then for the payment of IGST. It is not used for the payment of SGST or UTGST. Meanwhile, the amount of ITC relating to SGST is utilised for payment of SGST or UTGST and then for the payment of IGST. Such amounts are not used for payment of CGST. We can see how Input Tax Credit is used from the below example and table: 0 Share Share Share on Facebook Share on Twitter Share on LinkedIn Share on WhatsApp Related Questions What is composite supply and mixed supply? What is the concept of supply in GST? What are the steps involved in computation of income tax as per the Income tax act, 1961? What is reverse charge in GST? What is Alternate Minimum Tax? Is agricultural income taxable in India? How to determine residential status of an individual as per Income Tax Act, 1961?