A: Input Tax Credit (ITC) allows a business to reduce the tax it has already paid on inputs. R: ITC prevents the cascading effect of taxes (tax on tax). Choose the correct option. MCQ with Answer and Explanation
A: Input Tax Credit (ITC) allows a business to reduce the tax it has already paid on inputs. R: ITC prevents the cascading effect of taxes (tax on tax). Choose the correct option.
A. Both A and R are true and R is the correct explanation of A
B. A is false but R is true
C. A is true but R is false
D. Both A and R are true but R is NOT the correct explanation of A
Answer: Option A
Solution (By JKSSB Mock Tests)
ITC allows businesses to claim credit for taxes paid on purchases against their output tax liability. This ensures tax is only levied on the value added at each stage, eliminating the cascading effect. R correctly explains the purpose of ITC.
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