Common Credits - GST
- Contributed by CA Sri Harsha and CA Manindar
It is not a rocket science to understand why the credit of taxes paid on inputs, input services and capital goods were given to the tax payer and allow him to set off against his output tax liabilities. This is purely to avoid the cascading effect that is to avoid taxes on taxes. In the event of inputs, input services and capital goods were used in generating exempted outputs, then credit of taxes paid on inputs, input services and capital goods will not be given as there was no cascading effect for the reason that no tax is collected on output.
Read more: Understanding the dynamics of common credits reversal under GST