Input Tax Credit or ITC means claiming the credit of the GST paid on your behalf for the purchase of Goods or Services in the chain of doing the business.
So let us take an example to understand ITC for a freelancer’s point of view.
Let’s assume a monthly turnover from Indian clients only of ₹2Lakh. So one has to pay the GST at the rate of 18%, which is ₹36,000.
However, the freelancer may have paid rent as well as internet and telephone charges to work for clients. So he can take the GST paid on those bills as the input tax credit or ITC.