Input Tax Credit (ITC)

 What ITC Means

Input Tax Credit (ITC) = The GST you already paid on your business purchases (inputs) can be deducted from the GST you collect on your sales (output). Example: You buy raw materials worth ₹10,000 and pay 18% GST = ₹1,800. You sell the finished goods for ₹15,000 and collect 18% GST = ₹2,700 from your customer. Instead of paying full ₹2,700 to the government, you subtract the ₹1,800 already paid → so you only pay ₹900. This system avoids double taxation. 🔹 Why a Last Date? The government fixes a last date (30th November of the next FY or earlier) because: To close accounts of that financial year properly. To avoid misuse of ITC after too much time has passed. To ensure businesses claim credits in a timely and transparent manner. 🔹 Why You Need to Pay If you don’t claim ITC before the deadline: You lose the right to set it off against your GST liability. That means you will have to pay the full GST amount to the government, even if you had already paid GST on purchases. 👉 Example: If you forget to claim ₹5,000 ITC before the deadline, you cannot use it later, so you end up paying extra ₹5,000 from your pocket.