Under GST, which of the following is true regarding input tax credit?

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Question: Under GST, which of the following is true regarding input tax credit?

Options:

Correct Answer: It can be claimed only if the supplier has paid the tax

Solution:

Input tax credit can only be claimed if the supplier has paid the tax, ensuring that the tax is actually collected.

Under GST, which of the following is true regarding input tax credit?

Under GST, which of the following is true regarding input tax credit?

Step 1: Understand what input tax credit (ITC) is. It is a credit that businesses can claim for the tax they have paid on purchases.
Step 2: Know that under GST (Goods and Services Tax), businesses can only claim ITC if the supplier has actually paid the tax to the government.
Step 3: This means that the tax must be collected and reported by the supplier for you to claim the credit.
Step 4: If the supplier has not paid the tax, you cannot claim the input tax credit.

Input Tax Credit (ITC) – ITC allows businesses to reduce the tax they have paid on inputs from their output tax liability, ensuring that tax is only paid on the value added.
Supplier's Tax Payment – ITC can only be claimed if the supplier has actually paid the GST, which prevents fraudulent claims and ensures tax compliance.