INPUT TAX CREDIT (ITC) AND BLOCKED CREDITS UNDER GST: EXPLAINED SIMPLY

AUTHOR – JISHU DAS, STUDENT AT NATIONAL LAW UNIVERSITY, TRIPURA

BEST CITATION – JISHU DAS, INPUT TAX CREDIT (ITC) AND BLOCKED CREDITS UNDER GST: EXPLAINED SIMPLY, INDIAN JOURNAL OF LEGAL REVIEW (IJLR), 6 (8) OF 2026, PG. 289-291, APIS – 3920 – 0001 & ISSN – 2583-2344.

Imagine you are running a small business. Every time you buy raw materials or services, you pay GST to your supplier. When you sell your product, you collect GST from your customer. Without any relief, you would end up paying tax on tax — which is unfair and increases the final price for everyone.

The Input Tax Credit (ITC) mechanism solves this problem. It lets you subtract the GST you paid on your purchases (inputs) from the GST you collect on your sales (outputs). You pay tax to the government only on the value you actually added. This is the heart of the Goods and Services Tax (GST) system in India.