Introduction:
The GST Act came in force from 1st July, 2017. There were many interpretation issues with respect to the definitions, glossary and terms use in the law. Since, such definitions were adopted from various legacy laws in India prior to GST; such as Service Tax, State VAT, Central Excise Act, Luxury Tax, Entertainment Tax, etc. it was difficult to make applicable one definition for different sectors. Hence, some modifications from existing definitions were made. Therefore, it was important to established a nexus of the terms used in the GST definitions. The definition discussed here is”Input Tax Credit”.
So what do you mean by “Input Tax Credit”?
Section 2(63) of CGST Act, 2017 – “Input Tax Credit” means the credit of input tax;
Conclusion:
Input Tax Credit (ITC) is the tax paid by the buyer on purchase of goods or services.Such tax which is paid at the purchase when reduced from the liability payable on outward supplies is known as “Input Tax Credit”.