Skyrocket Your Savings By Learning About Input Tax Credit Under GST

What Is Input Tax Credit Under GST?

In every discussion on the state-wide implementation of GST, the Input Tax Credit (ITC) has consistently emerged as the very essence and foundation of the GST framework.

The input tax credit in GST is like a money-saving wizard for businesses, preventing you from paying taxes twice and saving your hard-earned money.

When a company buys ingredients or materials, it has to pay taxes on them. But ITC steps in like a superhero, letting the business use those paid taxes to lower the taxes it owes when selling its goods.

It's similar to receiving a refund for taxes already paid, making things fairer and allowing businesses to save more money.

Suppose you run a bookstore. When you buy books to sell, you pay taxes on those purchases. With ITC, these taxes can now be used to save money. When you sell those books to customers, you can deduct the taxes you paid from the taxes you owe.

It means that you just pay taxes once, increasing the efficiency of your business and the profitability of your bookselling venture!

Continue reading this blog to understand what is an input tax credit in GST and how to claim a GST input tax credit. Our tax consultant in Gurgaon has shared important insights on this topic to make your business better and your tax bill smaller.

Discover If You're Eligible for ITC Benefits!

Top CA firms in Gurgaon have listed out the important eligibility criteria for Input Tax Credit benefits.   Find out if you can save big!

Invoice Requirement: Make sure you have a valid Tax Invoice, Debit or Credit Note, or Supplementary Invoice from your supplier.

Receipt of Products/Services: Confirm that you have physically received the products or services for which you want to claim ITC.

Return Filing (GSTR 3): Maintain your eligibility to claim ITC advantages by filing your returns regularly, especially GSTR 3.

Tax Payment Verification: Confirm that the tax amount levied by your supplier has been duly paid to the government, which is a necessary step to qualify for ITC benefits.

Invoice Matching Completion: Before filing a claim, make sure you've finished matching invoices, accounted for input tax credit reversal under GST, and calculated the final ITC amount.

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Types Of Taxes Eligible For Input Tax Credit In GST

In GST, businesses can claim Input Tax Credit (ITC) on the following types of taxes:

CGST (Central Goods and Services Tax): a tax charged by the Central Government.

SGST (State Goods and Services Tax): tax levied by the state government

IGST (Integrated Goods and Services Tax): It is collected by the Central Government but is shared between the states.

UTGST (Union Territory Goods and Services Tax): It is similar to SGST but is applicable in Union Territories.

If you have further queries or need help regarding taxation services, feel free to connect with our experts.

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Learn About The Ineligible Input Tax Credit Under GST

Before moving further check here the list of blocked input tax credit under GST –

• ITC cannot be claimed on the purchase, lease, or repair of a motor vehicle unless it is used for the transportation of goods or passengers.
• It is not allowed for food and beverage expenses such as catering services, restaurant expenses, and outdoor catering.
• Expenses for health and fitness services.
• Any goods or services used for providing travel benefits to employees on vacation.
• It is also not allowed on goods or services received as gifts or free samples.

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What Is The Time Limit To Claim Input Tax Credit Under GST?

There is a time limit for claiming GST input tax credit. Businesses must claim ITC by the earlier of the two dates listed below:

ITC can be claimed up to the due date for filing the annual return for the financial year to which the invoice relates.

Businesses can claim ITC until the filing of the monthly or quarterly return for the month of September following the end of the financial year, whichever comes earlier.

The Document Checklist For Claiming Input Tax Credit In GST

Following are the documents you need to claim input tax credit under GST act –

• Confirm you possess the supplier's invoice
• Include invoices that look like Bills of Supply if the total amount is less than Rs. 200.
• Debit notes issued by the supplier
• Include the Bill of Entry or any equivalent documentation for import transactions.
• Include the Bill of Supply from the supplier.
• Invoice or credit note provided by the Input Service Distributor.

How To Claim Input Tax Credit In GST Portal?

To claim input tax credit in GST portal, follow these steps-

• Visit the official GST website (https://www.gst.gov.in/).
• Log in with your credentials, including your username and password.
• After logging in, go to the dashboard.
• Go to the 'Services' tab on the dashboard and select 'Returns.'
• To provide a statement using the GST Portal, click the 'Prepare Online' button under GST ITC-01.
• From the 'Claim Made Under' drop-down menu, select the relevant claim type.
• Enter the GSTIN of the provider of the goods or services.
• Fill in the invoice details, including invoice number and date (which should be before the grant of approval).
• Select the right 'Goods Type' from the drop-down menu.
• Enter a description of the stock, semi-finished, or finished product inputs.
• Choose the correct 'Unit Quantity Code (UQC)' from the drop-down list.
• Specify the number of inputs.
• Enter the invoice amount, taking into account any revisions by debit or credit note.
• Enter the claimed ITC for Central Tax, State/UT Tax, Integrated Tax, and Cess. Check that the CGST and SGST amounts are the same and that the total does not exceed the invoice amount.
• To add the entry, click the 'Add' button.
• After entering all your data, click 'Save.
• Click 'Preview' to generate a PDF draft of GST Form ITC-01.
• Click on the Submit button to submit the ITC form.
• Click 'Proceed and refresh the page, the status will change to Submitted.
  

How Can DSRV India Help You To Claim Input Tax Credit Under GST?

Looking for a simple way to claim Input Tax Credit (ITC) under GST? Let DSRV India be your guide! We ensure that you have all of the necessary paperwork and guide you through each step of the GST portal. You won't miss out on any eligible credits, and your claims will be accurate and on time. Don't wait – let DSRV India help you claim your ITC confidently and take your business to new heights!