Input Tax Credit Under Goods and Services Tax
In GST input tax credit can be availed on inward supply of goods or service or both if the same(goods/services) are used in the course of business.
Since GST is charged on both goods and services, input credit can be availed on both goods and services (except those which are on the exempted/ negative list).
Any registered person can avail credit of tax paid on the inward supply of goods or services or both, which is used or intended to be used in the course or furtherance of business.
GST payable on output (Final Product) is Rs 450
GST paid on input (Purchases) is Rs 300
You can claim input credit of Rs 300 and you only need to deposit Rs 150 in taxes.
The ITC would be permitted to be utilized in the following manner:
ITC of CGST allowed for payment of CGST & IGST in that order
ITC of SGST allowed for payment of SGST & IGST in that order
ITC of IGST allowed for payment of IGST, CGST & SGST/UTGST in that order.
ITC of CGST cannot be used for payment of SGST/UTGST and vice versa.
GST comprises of the following levies:
Central Goods and Services Tax (CGST) on intra-state or intra-union territory without legislature supply of goods or services or both.
State Goods and Services Tax (SGST) on intra-state supply of goods or services or both.
Union Territory Goods and Services Tax (UTGST) on intra-union territory supply of goods or services or both.
Integrated Goods and Services Tax (IGST) on inter-state supply of goods or services or both.