Industry has room to factor in costs in terms of ITC accumulation: Official

Industry has the elbow room to factor in costs in terms of accumulation in input tax credit (ITC) arising out of rate rationalisation under goods and services tax (GST) as long as they can be justified as integral to the transaction, a senior government official said.

- MONIKA YADAV

The official added businesses should act in good faith, keeping their bona fide intent in mind.

The accumulation of ITC has arisen because GST rates on final products have been cut while input taxes on raw materials and services remain higher.

Rationalisation, effective on September 22, has reduced tax rates on several items, with the rates on goods like renewable-energy products and fast-moving consumer goods cut from 12 per cent to 5 per cent.

Meanwhile, many products such as air conditioners, batteries, and small cars have been moved from the 28 per cent slab to 18 per cent.