Seamless flow of Input Tax Credit was the major concern which was missing in pre GST era and because of that there were so many disadvantages which were Indian economy was facing in the local market as well as international market too. VAT implementation was the first step towards improvement in indirect taxes in India which showed that Government was working in right direction to allowing the credit of Input Tax at state and CENVAT at centre level. But still it is not possible to flow the credit of Input Tax from manufacturer to retailers. These results in cascading that means tax charged on tax which result in increased price of the product. This makes Indian manufacturer less competitive in domestic and international market. To overcome this problem and to allow the credit from manufacturer to retailers India has implemented Goods and Services Tax from July 1, 2017. It’s really a great tax reform since independent. This paper is an attempt to study the Credit of Input Tax mechanism under goods and services tax laws and how its frequent amendments are impacting the businesses at large, its challenges and suggestion for growth of Government revenue and Indian economy.

KEYWORDS:  CENVAT, VAT, Input Tax Credit, GST, Indian Economy.