Businesses can now claim input tax credits (ITCs) for 2021-2022 and correct any errors in outbound supply data until November 30.
The ITC is a mechanism to avoid the cascade of taxes. The tax cascade, in simple language, is a “tax on tax”. Under the current tax system, the credit for taxes levied by central government is not available as an offset for the payment of taxes levied by state governments, and vice versa.
One of the most important features of the GST system is that the entire supply chain would be subject to GST which would be levied simultaneously by the central and state governments. Since the tax collected by the central government or the state governments would be part of the same tax system, the tax credit paid at each stage would be available as an offset to the payment of tax at each subsequent stage.
