Uni

t3

Di
scusst
heconceptofI
nputTaxCr
edi
t(
ITC)
.

InputTaxCr edi
t( I
TC)ist hecoreconceptofGSTasGSTi sdesti
nati
on
basedt ax.Goodsandser v
icet
axaimsatpr ovi
dingseaml essf
lowofcredit
throughoutsuppl ychain.ThusInputtaxcredi
tist hebackboneofGoods
andSer v i
ceTax.ITCav oi
dscascadingeff
ectoft axesandensurest
hattax
i
scol lectedintheSt at
einwhichgoodsorser vi
cesorbot hareconsumed.
Cascadi ngeffectofdut yortax(i.
e.dutyondut y)happenswheretaxis
l
ev i
edatev er
ystageofsupply.

Accordingt osection2( 63)ofCGSTAct2017,“ inputtaxcr edit

”
meanscr editofinputtax.FurthersectionInputTaxSection2(62)ofCGST
Actdefines‘ i
nputtax’asf oll
ows— “ Inputt ax”i
nrelat
iont oar egi
stered
person,meanst heCent raltax( CGST) ,Statetax(SGST) ,I
ntegrat
edt ax
(I
GST)orUni onterri
tor
yt ax( UTGST)char gedonanysuppl yofgoodsor
servi
cesorbot hmadet ohi m andincludes--

(
a)t
hei
ntegr
atedgoodsandser
vicest
axchar
gedoni
mpor
tofgoods

(b)t
hetaxpayabl
eunderthepr
ovi
sionsofsub-
sect
ions(
3)and(
4)of
sect
ion 9[
rev
ersechar
geofCGST]

(c)thet
axpayabl
eundertheprov
isi
onsofsub-sect
ions(3)and(4)of
secti
on5oft
heInt
egr
atedGoodsandServ
icesTaxAct[rev
ersechar
geof
IGST]

(
d)thetaxpayabl
eundertheprov
isi
onsofsub-
sect
ion(
3)andsub-
sect
ion
(
4)ofsect i
on 9 oftherespect
iveStat
eGoodsand Servi
cesTaxAct
[
rev
ersechargeofSGST]or

(e)thetaxpay
abl
eunderthepr
ovisi
onsofsub-
sect
ion(3)andsub-
secti
on
(4)ofsecti
on7oftheUni
onTerri
tor
yGoodsandServi
cesTaxAct[rever
se
chargeofUTGST]
,

butdoesnoti
ncl
udet
het
axpai
dundert
hecomposi
ti
onl
evy
.

I
nputTaxCr
edi
tisel
i
gibl
eonl
ywheni
tiscr
edi
tedt
oel
ect
roni
ccr
edi
tledger
oft
axabl
eper
son.

Electr
oni
cCredi
tLedgermeanstheelect
roni
ccr
edi
tledgerr
efer
redt
oin
secti
on49(
2)ofCGSTAct-sect
ion2(
46)ofCGSTAct
.

“ElectronicCredi
tLedger
”ist
hei nputtaxcreditledgerinelect
roni
cform
mai ntainedatthecommonportalforeachregisteredtaxabl
eperson.Thi
s
creditcanbeut il
i
zedforGSTl
iabi
lit
yasspecifi
edi nsection49(4)ofCGST
Act .

“I
nput
”meansanygoodsot
herthancapit
algoods,usedori
ntendedtobe
usedbyasuppl
i
eri
nthecourseorfur
ther
anceofbusiness-sect
ion2(59)
ofCGSTAct
.

“I
nputServi
ce”meansanyserviceused orint
ended to beused bya
suppl
ieri
nthecour
seorfur
ther
anceofbusiness-sect
ion2(60)ofCGST
Act.

OutputtaxSec2( 82)oftheCGSTAct,2017:“
Outputtax”inrel
ati
ontoa
taxabl
eperson,
meanst het
axchar
geabl
eunderthisActontaxabl
esuppl
y
ofgoodsorservicesorbothmadebyhim orbyhisagentbutexcl
udest
ax
payabl
ebyhim onr ev
ersechar
gebasi
s.

“Outward supply”inrelati
on to a person,means supplyofgoods or
servi
ces,whetherbysale,t
ransf
er,bart
er,exchange,l
i
cence,
rent
al,
leaseor
disposaloranyothermode, madeoragr eedt obemadebysuchper sonin
thecourseorfurt
heranceofbusiness-section2(83)ofCGSTAct.