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Input Tax Credit

Overview

ITC is also known as Input Tax Credit, it is the tax paid by the business on a purchase and it can be used to reduce its tax liability when sales are made. In general, the tax liability of businesses can be reduced by claiming credit to the extent of GST paid on purchases.

We all know that GST is an integrated tax system where every purchase by a business should be matched with the sale of another business.  

Key features to remember before claiming ITC

  • You should have a tax invoice of purchase or debit note issued by registered dealer.
  • You should have received the goods/services.
  • Now the tax charged on your purchases has been deposited to the government by the supplier in cash or through claiming input credit.
  • The supplier needs to file GST returns.
  • ITC will only be allowed if the supplier has deposited the tax he collected from you. So it is necessary to match input credit before claiming.
  • ITC shall be revered if invoice of supplier remains unpaid for 180 days 
 

It is important to remember these points:

  • CGST ITC availed against CGST but cannot be used to pay SGST liability.
  • SGST ITC availed against SGST but cannot be used to pay CGST liability.
  • CGST & SGST ITC cannot be used to pay each other.

Registration Process

  • Firstly your seller needs to upload the information of all tax invoices issues in GSTR 1.
  • Your details related to sales will auto populate and get reflected in GSTR2A, the same data will appear when you will file GSTR 2.
  • After that you will accept the details regarding the purchase which has been made reported by seller correctly and then the tax on purchases will be credited to your (buyer) “Electronic Credit Ledger”. Now the buyer can adjust it against future output tax liability and get the refund.
No other common registration

The registration process is same as mentioned in the registration section.

FAQS

Ineligible Input Tax Credit (ITC) Under GST. If you are a registered person under GST, then you are eligible to avail input tax credit for tax paid on your purchase of goods and services which are used for providing output goods and services.
Unfortunately, ITC can’t be used to pay output tax, which states that payment mode is only through cash under reverse charge. Self-Invoice: The taxable person paying tax under reverse charge is required to issue self-invoice.
ITC can be claimed by the buyer as long as they use the goods and services they bought on reverse charge basis for business purposes only. A supplier can’t claim ITC on the tax paid on goods/services that were used to make supplies that incur reverse charge.
ITC can be claimed if this services is directly use in providing main service (output service liability) otherwise we can’t claim expenses as input. Under RCM tax paid is allowed as input tax credit.
ITC for RCM cases are availed within the same month during which inward supply is received. By means of which GST form can be self-assessed RCM tax paid in cash can be claimed as ITC.
ITC is available for capital goods under GST. Capital Goods used exclusively for non-business (personal) purposes, it is important to note that no ITC are allowed if depreciation has been claimed on tax component of capital goods.

List of Documents

  • Bill of supply issued by the supplier
  • Bill of entry
  • Invoice or credit note to be issued by the Input Service Distributor(ISD)
  • Debit note issued by the supplier
  • Invoice issued by the supplier

Pricing Plan

BASIC ₹4720
Quarterly

  • Turnover below Rs 1 Cr.
  • Personalized GST Accountant
  • 12 months for GSTR 3B and quarterly GSTR1
  • Accounting & E-way bill Software
  • Upto 250 Invoices
  • Upto 250 Purchase Invoices & Orders
  • GSTR-4 & 9 Return Filing
  • Import or Export to Excel
Get Plan

SILVER ₹6000
Quarterly

  • Turnover upto Rs 1.5 Cr.
  • Inclusive of Basic Package
  • Upto 500 Invoices
  • Upto 500 Purchase Invoices & Orders
  • -
  • -
  • -
  • -
Get Plan

GOLD ₹9440
Quarterly

  • Turnover between Rs. 2 Cr to 5 Cr.
  • Inclusive of Silver Package
  • Upto 5000 Invoices
  • Upto 5000 Purchase Invoices & Orders
  • Input Tax Credit Reconciliation
  • GSTN API Connect to File Directly
  • Import or Export to Tally
  • Upto 5000 Estimates
Get Plan

PLATINUM ₹14400
Quarterly

  • Turnover above Rs 5 Cr
  • Inclusive of Gold Package
  • Monthly 2A reconcilation
  • Monthly Out Put Reconcilation
  • Unlimited Estimates
  • Unlimited Invoices
  • Unlimited Purchase Invoices & Orders
  • Import or Export to Excel
Get Plan

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