In terms of economy, what is the full form of ITC?

Key Points

• Input Tax Credit (ITC) is a mechanism to avoid cascading of taxes. Cascading of taxes, in simple language, is 'tax on tax'.
• ITC means reducing the taxes paid on inputs from taxes to be paid on output.
• When any supply of goods or services or both is made to a taxable person, the GST charged is known as Input Tax.
• ITC is available only to a person who is registered under GST.

Additional Information

• Input Tax Credit (ITC) plays a significant role in the GST framework and ensures that there is no cascading effect of taxes.
• It is crucial for businesses as it helps in reducing the tax liability and ultimately the cost of the goods and services.
• Claiming ITC requires compliance with various conditions and documentation as prescribed under the GST law.
• Proper maintenance of records and timely filing of returns are essential for claiming ITC.