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Input Tax Credit (ITC)

Credit for GST paid on business purchases, used to offset GST liability.

Input Tax Credit (ITC) allows businesses to claim credit for GST paid on purchases (inputs) against their GST liability on sales (output). This prevents cascading of taxes.

ITC can be claimed on:

  • Goods purchased for business use
  • Services received for business purposes
  • Capital goods

ITC cannot be claimed on:

  • Personal use items
  • Food and beverages (except for hospitality business)
  • Membership of clubs
  • Items used for exempt supplies

Examples

  • A manufacturer claiming ITC on raw materials purchased
  • A service company claiming ITC on office rent and software subscriptions

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