Input Tax Credit (ITC) is a mechanism under the Goods and Services Tax (GST) system that allows taxpayers to claim a credit for the GST paid on the purchase of goods or services that are used for the furtherance of business. The ITC value can be reduced from the GST payable on the sales by the taxable person only after fulfilling some conditions. Some key points to note about ITC under GST are:

• The expenses or purchases must be reasonable in quality, nature, and cost in relation to the nature of the business.
• ITC can only be claimed by a registered person under the GST Act, such as a manufacturer, supplier, agent, e-commerce operator, aggregator, or any other person mentioned.
• ITC can only be claimed if the supplier has deposited the tax collected from the buyer.
• The amount of ITC on account of SGST or UTGST shall first be utilized for the payment of SGST or UTGST, then for payment of IGST. Such amount cannot be used for payment of CGST.
• ITC can not be used for payment of interest, penalty, fees, or any amount payable under the act other than the GST.

To claim ITC under GST, the buyer must pay towards the supply of goods and/or services within 180 days from the invoice date. If they fail to do so, then the ITC already claimed will need to be reversed. The ITC claimed must also be matched and validated before it can be claimed. Input tax credit helps in reducing the tax burden on businesses and ensures a seamless flow of credit in the GST system.