An Empirical Study of Challenges pertaining to the Input Tax Credit (ITC) under the Goods & Service Tax Regime

This review paper critically examines the empirical challenges faced by businesses in claiming Input Tax Credit (ITC) under the Goods and Services Tax (GST) regime. One of the key provisions of the GST law is the Input Tax Credit (ITC). ITC aims to eliminate cascading taxes by allowing businesses to offset the tax paid on inputs( Purchases ) against the tax collected on outputs ( Sales ). The paper highlights key challenges such as complex compliance procedures, technical issues in the GST portal, mismatches in supplier and buyer data, and lack of awareness among taxpayers. Furthermore, it discusses the legal ambiguities surrounding the eligibility criteria for claiming ITC. The efficiency of the ITC mechanism, such as improving technological infrastructure, simplifying procedural requirements, and increasing awareness campaigns. This paper serves as a comprehensive review of the challenges faced by businesses under the current GST regime and offers insights for policy improvements to ensure a more effective tax credit system.