Input Tax Credit Rules

Input Tax Credit (ITC) allows businesses to claim a credit for the tax they pay on goods and services used for their operations. When a business purchases items or services and pays sales tax, it can deduct that tax from the total it owes to the government when selling its goods or services. This helps avoid "tax on tax" and encourages fair taxation. To qualify for ITC, the purchases must be related to the business's taxable activities, and proper documentation, like invoices, must be maintained. This system ultimately reduces the overall tax burden on businesses.