Input Tax Credit (ITC) – What Shop Owners Need to Know

Input Tax Credit (ITC) lets you reduce your GST liability by claiming credit for tax paid on purchases.

What Is ITC?

When you buy goods for your business and pay GST, you can claim that tax as credit against your output GST (tax on sales). It avoids double taxation.

Who Can Claim ITC?

  • GST-registered businesses – You need a valid GSTIN
  • Business use – Purchases must be for business, not personal
  • Valid invoices – Supplier must have paid GST and issued proper invoice
  • Within time limit – Generally before filing of September return or annual return

Common ITC Rules

  • Blocked credits – Personal use, motor vehicles (except specific cases), etc.
  • Reversal – If payment not made to supplier within 180 days
  • Documentation – Keep invoices and ensure supplier has filed returns

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