Understanding Input Tax Credit (ITC) in GST

The Input Tax Credit (ITC) in GST allows businesses to reduce their tax liability by claiming credit for GST paid on business-related purchases. ITC ensures tax is collected on added value at each supply chain stage, avoiding tax cascading. Businesses can deduct input tax from GST collected on sales if they meet conditions like having valid invoices and filing returns. The supplier must also pay GST and file returns. ITC encourages compliance, reduces tax burden, and ensures credit flow, but misuse can lead to penalties, necessitating accurate records and compliance with ITC provisions.