Question

Assertion (A): GST payable = Output GST + ITС.

Reason (R): Input Tax Credit (ITC) is a provision of reducing the GST already paid on inputs in order to avoid the cascading of taxes.

Options

• A is true, R is false

• A is false, R is true

• Both A and R are true

• Both A and R are false

Answer 1

A is false, R is true

Explanation:

Assertion A is incorrect: The correct relation is GST payable = Output GST – Input Tax Credit (ITC), not + ITC.

Reason R is correct: ITC allows a taxpayer to reduce tax on outputs by crediting tax paid on inputs, preventing cascading of taxes e.g., GST payable = Output tax – Input tax.