Input Tax Credit Under GST – How To Claim & Calculation Method

In a business, the commercial entity is liable to pay an input tax, i.e., Goods and Service Tax (GST) on raw items purchased for production. When they sell manufactured items in the market, their customers also pay GST on the supply price of that item. This way, the government gets the tax on the raw goods twice. For this, it lets them claim the input tax. In this regard, one can use a GST calculator to calculate how much ITC he/she can claim.

What is Input Tax Credit in GST?

Input Tax Credit in GST refers to the GST amount you pay while purchasing raw goods. The supplier settles it with the government on your behalf. On the other hand, the output tax credit refers to the GST you collect from customers while selling your manufactured item. You have to pay this output tax to the government. You can claim your ITC as the amount is paid twice – first, while buying raw items, and secondly, while selling manufactured products.

Let’s say you have paid GST of Rs. 200, Rs. 150, and Rs. 250 to three of your suppliers while purchasing raw items. After buying the manufactured items, your client gives you a GST of Rs. 1,000.

In this scenario, your total input tax credit is Rs. (200 + 150 + 250) = Rs. 600 and your output tax is Rs. 1,000. So, the total inflow to government’s coffer is Rs. 1,600. You can claim the ITC of Rs. 600 by filing your GST returns.

In this regard, manual calculation of this input/output tax on the product’s supply price may be a difficult and time-consuming process. You can use a GST calculator to measure these tax amounts.

How to claim Input Tax Credit

In order to claim your ITC, you need to file the GST returns on due time. Here is a stepwise guideline for the GST return filing process:

Step 1: After visiting the GST portal, log in to your user account using the PAN number and password

Step 2: Click ‘Service’

Step 3: Tap on ‘Returns Dashboard’

Step 4: Upload all the invoices and fill in inward and outward returns

Step 5: Click on ‘Save,’ and then tap on ‘Submit’

Step 6: Navigate to ‘Payment of Tax’ to see your tax payment status

Step 7: Proceed by clicking ‘Offset Liability’ if there is any pending tax amount

Step 8: Click on the check box of declaration

Step 9: Either proceed with ‘File form with EVC’ or click on ‘File form with DSC’ and complete the payment

How to know the Input Tax Credit using a GST calculator

In order to know how much ITC you can claim, you have to calculate the input GST amount separately using this calculator. Here is a stepwise-guideline to measure the ITC amount:

Step 1: Access the GST calculator from the website of a financial institution

Step 2: Enter the supply price and applicable GST rate

After these steps, you can get your ITC amount on the interface of that calculator.

In conclusion, keeping all the necessary invoices organised and filing GST returns in time is necessary for successfully claiming your ITC. This way, you can regain the double tax you have paid. Nevertheless, if you need to measure the indirect tax on an item’s supply price, you can use the GST calculator.

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