Frequently Asked Questions
What is Input Tax Credit (ITC) mechanism?
A perfect value-added tax system aims at eliminating cascading effect of taxes in a supply chain of producer/manufacturer and end consumer. A continuous chain of set-off of earlier taxes from the original producer’s point and service provider’s point up to the retailer’s level is established so that burden of tax is passed on to end consumer, i.e. destination. This is achieved through the mechanism of Input Tax Credit.