GST input tax credit: ITC means Input Tax Credit, it is a term and concept of Income Tax which is valid for those registered seller/buyers/manufacturers etc who are enrolled under GST(Goods and Services Tax) can avail the benefits of ITC services while filling the GST return.
ITC in itself defines a little bit about its meaning in which the word “Input Tax” refers to the tax on products/raw materials /services that we buy from another seller and “Credit” means to achieve that tax. Below we are going to understand about this term in elaborated form.
Input tax credit
ITC is a very significant and crucial part for manufactures, sellers, buyers, retailers etc. It is because Manufactures /Sellers obtain raw materials, services, power from other end by paying some relevant money which is inclusive of GST and that GST has to be deposited by means to Tax filing by that Seller from which one buys services, raw materials etc. This transaction as a whole has to be submitted before the ITC portal online by providing the bills and other proofs or information thus it becomes clear that One person had sold some services/goods/raw material to another one.
Now the buyer who has purchased the product, services, raw materials from the seller will process out these services etc to produce it to give it another form (For example:- One person buys computer parts from another seller and processes them out to assemble them as a computer).
Raw materials require some work labor and other investments which are kept in mind by the manufacturer while setting up the MRP value of the processed product.
At the time of selling of this ready products to other hands money is required to own that object which is inclusive of all types of taxes or GST which is paid directly or indirectly to the manufacturer, with the help of Valid bills Manufacturer Updates this data on ITC portal which is known as Output Tax Availing
Now this cycle continues and ITC plays a vital role at the time of GST return which is mentioned below.
Manufacturers at the time of Tax Filing will go to ITC portal or through Offline means by tax offices for filling the Tax Collected by selling the manufactured goods. ITC plays a vital role because Tax which was paid by the manufacturer during purchase of Raw materials, Services etc which is mentioned on his ITC portal will get deducted from the output tax which has to be paid for his /her sales. Details of Input tax are clearly mentioned on the sites with all information of the seller and buyer of the raw materials, services, products etc.
At the time of tax filing or Output tax filing if a person wants to pay the output tax completely without deducting from Input tax, can be done also. And can receive Input Tax through ITR which means Tax Return.
Significance Of Input tax credit
There are some general benefits of ITC because it gives relaxation and exemption to the manufacturer at the time of tax filing which might be a motivating factor by the Income Tax Department.
Note: One should always buy or sell services, products, raw material from authentic source and get a proper bill of that purchase, otherwise one can not avail the benefits of ITC and it also helps in Reducing blackmoney which is collected by not paying the Taxes.