In the context of GST, which of the following statements

Solution

The Core Concept Input Tax Credit (ITC) means that at the time of paying tax on output (your sales), you can deduct the tax you have already paid on your inputs (your purchases). This ensures that tax is levied only on the Value Addition at each stage of the supply chain.   Illustrative Example Let’s look at a manufacturer named "Company A":

• Purchases: Company A buys raw materials for ₹10,000 and pays 18% GST , which is ₹1,800 (this is the Input Tax).
• Sales: Company A processes the material and sells the finished product for ₹15,000 . They charge the customer 18% GST , which is ₹2,700 (this is the Output Tax).
• Net Tax Payable: Instead of paying the full ₹2,700 to the government, Company A uses the ITC of ₹1,800.

• Final Result: Company A only pays ₹900 to the government.

• Option A is incorrect because ITC is not a "cash refund" for every purchase; it is a credit used to offset liability. You only get a refund in specific cases (like exports or inverted duty structures).
• Option C is incorrect because ITC is a business-to-business (B2B) mechanism. End consumers do not "claim" ITC; they bear the final tax burden.
• Option D is incorrect because it describes the gross tax liability without the benefit of credit, which would lead to double taxation (cascading effect).

• Be a registered taxable person.
• Possess a valid Tax Invoice or Debit Note.
• Have actually received the goods or services.
• Ensure the supplier has paid the tax to the government and filed their returns.