Q.Choose the correct option: Input Tax Credit under GST means the credit of tax paid on —

The word 'input' points to the purchase side of the business, which is exactly what ITC relates to.

This tests the meaning of input in GST.

• (a) sales (output) — GST on sales is the output tax the business collects and owes; it is not the credit.
• (b) purchases (input) — correct. Input tax is the GST a business pays on its purchases; Input Tax Credit is the credit of that tax, which is set off against the output tax on sales so only the net is paid. …

Do not swap input and output: ITC is credit for tax on purchases (input), set o …