Input tax credit refers to the tax paid by a person who has a GST registration on the supply of goods or services, which includes central tax (CGST), state tax (SGST), integrated tax (IGST), or cess. This credit is used to reduce the tax liability when a sale is made. However, the tax paid on the composite taxation scheme is not included in input tax.
The Goods and Services Tax Act is based on the principle of value addition, and the tax liability is levied on the value added at each stage of the supply chain until it reaches the consumer. To avoid the cascading effect of tax liability on procurement of raw materials, consumables, plants, machinery, etc., businesses are allowed to offset the tax liability through input tax credit.
Every person with a GST registration in the supply chain collects and remits the GST tax to avoid double taxation and the cascading effect of tax. By utilizing the input tax credit mechanism, businesses can achieve neutrality in the incidence of tax and ensure that the input tax element is not included in the cost of production or supply of goods and services.
| Reduced Tax Liability | ITC allows businesses to claim credit for the tax paid on inputs used in the production of goods or services. This reduces the overall tax liability of the business |
| Cost Savings | ITC eliminates the cascading effect of taxes, which means that businesses are not required to pay tax on tax. This results in cost savings for the business, making goods and services more affordable for the end consumer |
| Increased Efficiency | The ITC system promotes transparency and efficiency in the supply chain as businesses are required to maintain proper records of input tax credits claimed and utilized. This reduces the chances of tax evasion and helps streamline the tax compliance process |
| Boosts Competitiveness | By reducing the tax burden on businesses, ITC makes them more competitive in the marketplace. This encourages businesses to invest in new technology, machinery, and infrastructure, which ultimately leads to increased productivity and economic growth |
| Encourages Compliance | The ITC system incentivizes businesses to comply with the GST regulations as only those businesses that are registered and compliant with GST can claim input tax credits. This helps bring more businesses under the tax net, increasing tax revenues for the government |
Step 1: Verify Input Tax Credit Claims-
The first step is to verify the ITC claims made in the GST returns against the purchase records and invoices.This involves checking if the supplier has reported the supply and if the recipient has reported the receipt of the supply.
Step 2: Reconcile Mismatched Data-
If there is a mismatch in the data, the next step is to reconcile the differences by communicating with the supplier and obtaining the correct invoices or rectifying the errors. This involves reconciling the data between GSTR-2A (auto-populated data) and GSTR-3B (self-assessed data) forms.
Step 3: Rectify Discrepancies-
Once the discrepancies have been identified and reconciled, the taxpayer can rectify any errors in the previous returns through GSTR-1 and GSTR-3B amendments.
Step 4: Claim ITC-
After the reconciliation and rectification process is complete, the taxpayer can claim the ITC in their GSTR-3B return for the relevant tax period.
Step 5: Audit and Compliance-
It is important for taxpayers to maintain proper records and documentation to support their ITC claims and be prepared for any audit or compliance checks by the tax authorities.
1. An invoice issued by the supplier of goods or services
2. An invoice issued by the recipient of goods and services supplied by an unregistered dealer, which falls under the reverse charge mechanism
3. A debit note issued by the supplier if the tax charged is less than the tax payable for such supply
4. A bill of entry or similar documents for integrated tax on imports
5. An invoice or credit note issued by an input service distributor according to GST rules
6. A supply bill from a dealer who has opted for a composition scheme, an exporter, or a supplier of exempted goods
7. As a registered taxable person, it is important to maintain proper records of these documents in order to claim ITC and reduce overall tax liability
Fill out the application form & other details.
Make the payment through online mode.
We will process your application.
A mail will be send on completion.
We provide free of cost consultation and legal advice to our clients.
All our services are online no need you to travel from your place to get our services.
We are a team of more than 15+ professionals with 11 years of experience.
There are no hidden & extra charges* other than the quote/invoice we provide.
We aim that all our customers are fully satisfied with our services.
We value your time and we promise all our services are delivered on time.
In this Journey of the past 10+ years, we had gained the trust of many startups, businesses, and professionals in India and stand with a 4.9/5 rating in google reviews.
Explore more of our blogs to have better clarity and understanding
of the latest corporate & business updates.
Introduction The startup ecosystem thrives on innovation, yet navigating it requires meticulous planning and strategic
Mandatory Filing: Every foreign company must prepare and file financial statements within 6 months at
Form ADT-3 is a statutory document mandated by Section 140(2) of the Companies Act, 2013,
A trademark is an emblematic symbol, logo, or brand name that distinguishes one company from
Now get all the services required for your business in a single app.
Legal Suvidha has been a one-stop Compliance Provider for all start-ups and entrepreneurs.
Want to Setup your business in India? Connect with the best Online Registration, Licenses and Return filing solution providers for business across India. Since 2007, LegalSuvidha has been a one-stop shop for all startups or entrepreneurs looking for a chartered accountant, company secretary or lawyer. We have been ensuring Startups and SMEs are fully compliant with India’s legal system. Over the past 15 years, the depth of our offerings has increased and that too at affordable prices and customer satisfaction has made our standing different and we are giving a tough competition to other online facilitators of legal services in India. We have the best team for Company incorporation, Trademark Registration, Auditing, Advisory and Tax Filing for large, medium, small businesses and Startups in India.
Most of the budding entrepreneurs are in dilemma about what kind of entity to register when they start their business. Should it be a private limited company, limited liability partnership, partnership firm, one person company or a sole proprietorship? Each of these has its advantages and disadvantages. The type of entity should be chosen only after one round of consultation with our experts, as they will be in a better position to guide on the same. For example, Registering as a private limited company would be a good fit for any venture that will look for funding at a later stage. You can contact Legalsuvidha for any type of registration and advice you need for your business transactions. We assure you of great professional service at a reasonable price. You can connect with us for a free check on the Company name availability.
The importance of intellectual property is very much but most of the businesses are not aware of the same. We at LegalSuvidha simplify the process for you to register a Trademark for your brand, to get copyright for your artistic, creative ability and will also help you in patenting the process after a proper patent search patents which will ensure that you have sole rights to your creation, be it your brand, your designs or your inventions. At Legalsuvidha, we are very well equipped to handle all your IP requirements. We facilitate trademark applications in just two days, copyright registration for all your software, pictures, audio, and video content, and can connect you to patent attorneys to conduct a patent search and file your patent applications.
To do any business in India, you need a license for almost everything. Started a manufacturing business? You need a GST Registration and a Trade License. For a food business, you need an FSSAI license. In case you have employees, You need a Professional Tax registration and Shops & Establishments Act Registration. If that’s not enough, you also need to file GST Returns and Professional Tax Returns.
There is a lot of importance of legal documentation when you start your business, whether with your Investors, partners/co-directors, employees and any vendors you deal with. By getting a lawyer to draft contracts or agreements with new vendors, employees, and investors, you’re ensuring that you have all the downsides covered. At LegalSuvidha, we connect you to lawyers who will deliver complex documents, from shareholders’ agreements and founders’ agreements to terms of service/privacy policy and non-disclosure agreements, at a reasonable cost in a few days.
It’s not enough to have started a private limited company or an LLP. You need to comply with all the requirements of the Ministry of Corporate Affairs, Central Board of Indirect taxes and Central Board of direct taxes once you register your business. You need to inform them of every relevant change you make, whether it is adding a director, removing a partner or increasing authorized share capital. You also need to file annual returns and maintain your accounts. In the case of a private limited company, you even need them audited. At LegalSuvidha, we facilitate all these services completely online. This means you can engage a professional on retainer for the year and we’ll ensure that all the formalities are completed for you while you focus on your business.
We are Authorized e-return Intermediaries and have recently launched our own ITR filing platform, this will help the salaried employees and businesses to get their ITR filed within the time and at a reasonable price. Through the use of automation, the system is highly effective and will help in filing ITR in up to 10 minutes for Salaried employees. We have on-boarded the best Chartered Accountants who will provide consultation for both Salaried employees and Businesses to file proper taxes to the government of India. This will help in avoiding legal notices in the future and will also help in getting the returns processed at the earliest. We are the first in the market to launch the ITR filing facility for FY 2018-19.
Legal Suvidha © 2013-2024. All Rights Reserved.
