- Input Tax Credit (ITC) is an important part of the Value Added Tax (VAT) system, allowing businesses to deduct the tax they have already paid on inputs from their output tax liability.
- This prevents double taxation and reduces the overall tax burden.
- Eligibility for ITC requires businesses to be registered under the VAT system, maintain proper documentation, use inputs for business purposes, and file VAT returns on time.
- Refunds of ITC may be available if input goods/services exceed the output tax liability, but businesses must provide proper documentation. In some cases, businesses may have to reverse the ITC claimed.
Source Fintedu
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