Input Tax Credit’ or ‘ITC’ means the Goods and Services Tax (GST) paid by a taxable person on any purchase of goods and/or services that are used or will be used for business. 

Central Govt Releases Rs. 17,000 Crore Of GST Compensation To States/UTs

The Central Government released an amount of Rs. 17,000 crore to States/UTs on 24.11.2022 towards the balance GST compensation for the period April to June, 2022.
The total amount of compensation released to the States/UTs so far, including the aforesaid amount, during the year 2022-23 is Rs.1,15,662 crore.

This is despite the fact that total Cess collection till October, 2022 is only Rs.72,147 crore and the balance of Rs. 43,515 crore is being released by the Centre from its own resources. With this release, the Centre has released, in advance, the entire amount of Cess estimated to be collected this year till March-end available for payment of compensation to States.
This decision was taken to assist the States in managing their resources and ensuring that their programmes especially the expenditure on capital is carried out successfully during the financial year.

Even in May this year, the Central Government had released Rs. 86,912 crore as provisional GST compensation to States for the period Feb-May'2022 despite the fact that there was only about Rs. 25,000 crore in the GST Compensation Fund, by making arrangement of funds of around Rs. 62,000 crore from its own resources.

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Why is Dual GST required?

India is a federal country where both the Centre and
the States have been assigned the powersto levy and collect
taxes t h r o u g h a p p r o p r i a t e legislation.
Both t h e l e v e l s of Government have distinct responsibilities to
perform according to the division of powers prescribed in the Constitution for which they need to raise resources.
A dual GST will, therefore, be in keeping with the Constitutional requirement of fiscal federalism.

What are the benefits available to small tax
payers under the GST regime?

Tax payers with an aggregate turnover in a financial
year u p t o [Rs.20 lakhs & Rs.10 Lakhs for NE and special category states] w o u l d b e e x e m p t f r o m tax.
Further, a person whose aggregate turnover in the preceding financial year is less than Rs.50 Lakhs can opt for a simplified composition scheme where tax will payable at a concessional rate on the turnover in a state.

[Aggregate turnover shall include the aggregate value of all taxable supplies, exempt supplies and exports of goods and/or services and exclude taxes viz. GST.]

Aggregate turnover shall be computed on all India basis. For NE States and special category states, the exemption threshold shall be [Rs. 10 lakhs].

All taxpayers eligible for threshold exemption will have the option of paying tax
with input tax credit (ITC) benefits.
Tax payers making
inter-State supplies or paying tax on reverse charge basis
shall not be eligible for threshold exemption.

How to compute ‘aggregate turnover’ to
determine eligibility for composition scheme?


The methodology to compute aggregate turnover is given in Section 2(6). Accordingly, "aggregate turnover" means value of all outward supplies (taxable supplies+exempt supplies +exports + inter-state supplies) of a person having the same PAN and it excludes taxes levied under central tax (CGST), State tax (SGST), Union territory tax (UTGST), integrated tax(IGST) and
compensation cess.
Also, the value of inward supplies on
which tax is payable under reverse charge is not taken
into account for calculation of ‘aggregate turnover’.