What is the Full Form of ITC in GST?
ITC full form in GST is Input Tax Credit. The most important concept of GST is the ITC, especially for a registered person selling or supplying goods and services. The requirement for a concept like ITC is a must because it prevents the cascading of taxes. If you are a registered person, then you can avail or record ITC or Input Tax Credit, and take benefits of tax deduction at the time of selling goods in the market.
ITC Practical Example
Suppose you are a manufacturer, and you manufacture smartphones in India. So, in order to manufacture a smartphone, you’d have to hire people, set up machinery and a whole manufacturing plant, and buy raw materials or parts from other suppliers to manufacture a smartphone. Correct? And when buying the raw material or machinery for your manufacturing plant, the seller will for sure collect 18% GST from you. So as per the ITC concept, you can record that tax amount in your books. And at the time of selling the smartphone to the consumer, you can collect the GST from them, but when it is time to pay back the taxes to the government, you can utilize ICT for tax deductions. Because you have already paid GST for raw materials, labor costs, and machinery setup.