GST – Using input tax credit

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  • Availing and utilising input tax credit
    • The GST paid on procurements is available as input tax credit and can be used to offset the output GST liability. In this module, you will learn what is input tax credit as well as the conditions and restrictions for availing input tax credit. You will also learn the process of availing input tax credit and the requirement to reverse input tax credit under various scenarios.
  • Reconciling input tax credit
    • One of the key challenges of the erstwhile tax regime was that the levy of taxes had a cascading effect. In the GST regime, this was sought to be remedied by allowing input tax credit, commonly known as ITC, on procurements. In the module on ITC, you would have learnt that ITC can only be availed if the supplier has furnished the details of the invoice in their statement of outward supplies and has paid the tax to the Government.
      This requires the recipient to reconcile the details of their procurements with the details furnished by the supplier on the GST portal. This reconciliation is called ‘vendor reconciliation’. In this module, we shall discuss the legal requirement and the detailed process for such reconciliation. We shall also highlight the key aspects and practical challenges faced during such reconciliation.
  • Distributing input tax credits
    • An input service distributor or ISD is a facility made available to businesses to distribute the tax paid on input services from a centralised location. By using this mechanism, a manufacturer could transfer the credit of service tax on services availed at the head office to its factories where the manufacturer had output excise liability. In this module, you will learn what an ISD is, the manner of distribution of tax, the compliance requirements and the process of reconciliation prior to tax distribution.