Input Tax Credit (ITC)

Input Tax Credit (ITC) is a mechanism allowing registered businesses to reduce the amount of Goods and Services Tax (GST) they pay on their purchases from the GST they collect on sales. Essentially, when a business buys goods or services, it pays GST to suppliers. With ITC, the business can subtract this initial GST paid from the GST it owes to the government on its sales, preventing double taxation. This ensures that tax is only paid on the value added at each stage of production or distribution, promoting transparency and reducing the overall tax burden.