Input Tax Credit effect: Why the GST cut may backfire for end-consumers in many sectors

ITC is important for a variety of reasons. Businesses don’t have to pass on the full tax on to he customers, thereby keeping the prices low. The  GST Council, as widely expected, moved to a two-slab indirect tax system by retaining the 5% and 18% rates and doing away with the 12% and 18% slabs. The GST Council has been maintaining the four-slab structure since 2017, when the indirect tax syst…