<p style="text-align:justify"><span style="font-size:14px">A registered person needs to pay the difference of GST on sales and GST on purchases made in a month. The purchase may be of goods, services or capital goods.</span></p>

<p style="text-align:justify">&nbsp;</p>

<p style="text-align:justify"><span style="font-size:14px">Capital goods are those goods which you had NOT purchased for the purpose of reselling. For example &ndash; Furniture in your shop, machine for production etc.</span></p>

<p style="text-align:justify">&nbsp;</p>

<p style="text-align:justify"><span style="font-size:14px">For example, A person made intra-state sales of Rs. 1 lakh in January and collected CGST of Rs. 2,500 and SGST of Rs. 2,500 at the rate of 5%. In the same month, he had made purchases of Rs. 80,000 and paid CGST and SGST of Rs. 2,000 each at a rate of 5%. He had also paid a bill of internet of Rs. 1,000 plus GST of Rs. 180.</span></p>

<p style="text-align:justify">&nbsp;</p>

<p style="text-align:justify"><span style="font-size:14px">Rs. 4,180 is allowed as a deduction from the Gross tax payable of Rs. 5,000. And therefore, a net of Rs. 820 is payable to the government.</span></p>

<p style="text-align:justify">&nbsp;</p>

<p style="text-align:justify"><span style="font-size:14px">Deduction of GST paid on the purchase of goods, services or capital goods is called input tax credit. There are certain limitations and restrictions on taking the input tax credit. You can read more about it from here &ndash; Input Tax Credit under GST</span></p>