What Is GST Input Credit?
First of all, let us know what is GST Input Credit. Well, GST Input credit is nothing but a balance of the amount of tax you paid at the time of purchasing goods that is kept safe until you pay your tax for your output. Now, when you pay your tax of output, automatically the previous balance amount kept safe for you will automatically be used and your total tax to be paid will get reduced. We will also discuss how to claim GST input credit but before that, let’s understand by an example how this thing actually works
Example: Suppose X bought goods for Rs 100 and paid Rs 18 additional as GST(Total: Rs 118). Now X sold goods to Y for Rs 200 and charged GST of Rs 36(Total : Rs 236). Now, X can claim GST input credit of Rs 18 that he paid at the time of purchases while paying tax to the government. (i.e net GST, X need to pay is only Rs 18).