Transition credit and Input Tax Credit

Posted on 11 June 2022 Category : GST terms difference

How to differentiate Input Tax Credit with Transition credit?

What is Input Tax Credit? How does Transition credit work under GST regime? What are the difference between Input Tax Credit and Transition credit?

Before GST regime, credit of taxes being levied by Central Government was not available as set-off for payment of taxes levied by State Governments, and vice versa. One of the most important features of GST is that the entire value chain would be subject to only a single indirect tax i.e. GST. GST would comprise of Centre and State/UT levies but will be collected as a single tax at a uniform rate for both inter-State and intra-State supplies. GST will thus subsume a number of State and Centre taxes into a single tax thereby allowing ITC of tax paid at every stage to be available as set-off for payment of tax at every subsequent stage.

Transition credit means balance of input tax credit under Pre-GST Regime to carry for the purpose of setoff against the GST Liability in GST Regime.

The details about Input Tax Credit and Transition credit with simple language from GST terms have been mentioned in this web blog separately. We suggest you to read these articles on Input Tax Credit and Transition credit, so as to enable you to have a clear idea on these GST terms.

For your immediate reference, we give below web links on Input Tax Credit and Transition credit separately below. You may kindly read the below links to know more about Transition credit and Input Tax Credit.

Meaning of Input Tax Credit Mechanism in GST

Term Transition credit under GST

The above information easily explains about Transition credit and Input Tax Credit.

We hope, you have satisfied with the difference between Input Tax Credit and Transition credit explained above. Do you have different thought on difference between Transition credit and Input Tax Credit?

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