input tax credit

This query is : Resolved

Keshav (Querist)
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05 January 2009 1.Why was sales tax replaced by VAT?

2.What is input tax credit?

3.Can input tax & output tax be kept separately over the financial year is it necessary to transfer to input tax credit?

Jitender

Jitender (Expert)
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05 January 2009 1 becz there was no credit provisions & vat chain was not concrete in that system.
2 ITC is the amount(paid on purchases) which we can set off aginst vat payable on sales .
3 they are kept separately but while making the payment ITC is adjusted with Output vat.