What is Input Credit?
Input Credit Tax in GST refers at the time of paying tax on an output in which you can reduce the tax that you have already paid on inputs.
The tax paid on input (purchases) is Rs 300 and you can claim the input credit of Rs 300. You only need to deposit and amount of Rs 150 in taxes.
The Input Credit in GST
The input credit mechanism is available to an individual when you are covered under the GST Act.
This means that if you are a manufacturer, a supplier, an agent, an e-commerce operator, aggregator or any of the person mentioned over here, then you can register under GST. You get eligibility to claim an input credit for the tax paid by you on your any kind of purchases.
How should we claim for the Input Credit under GST?
There is a process to claim input credit under GST in which
- You must have a tax invoice of purchase or a debit note which is issued by a registered dealer.
- You should have received the goods/services.
- The tax charged on your purchases has been deposited/paid to the government by the supplier in cash or through claiming input credit.
- The supplier has filed GST returns
Input credit is only allowed if your supplier has deposited the tax he collected from you. Every input credit that you are claiming shall be matched and validated before you can claim it.
All the supplier must be a GST compliant as well.