CA Suraj Shriyan
Here is a set off summary tool which serves as a comprehensive, one stop solution for GST ITC utilisation while filing GSTR-3B, effectively addressing multiple challenges faced by taxpayers. It is designed to resolve the issues outlined below and provide users with a seamless, hassle-free experience especially during last-minute due-date pressure while ensuring accuracy and efficiency in the filing process.
Problem : Under Section 49 of the CGST Act, 2017, read with Circular 98/17/2019-GST dated 23 April 2019, the input tax credit (ITC) of IGST must be fully utilised before using ITC of CGST or SGST for payment of any tax liability. With the introduction of Rule 88A, taxpayers were allowed to utilise IGST ITC after adjusting it against IGST liability, towards CGST and SGST output liabilities in any sequence. However, the GST portal, by default, applied IGST ITC first towards CGST liability and only the balance, if any, towards SGST liability. This default sequence caused SGST ITC to deplete faster while CGST ITC accumulated. Since CGST credit cannot be utilised for payment of SGST liability under the GST law, situations arose where taxpayers had sufficient CGST balance but were still required to pay SGST liability in cash, leading to unnecessary cash outflows.
Solution : To resolve the issue described above, the Set off summary applies an intelligent ITC allocation mechanism. It automatically directs IGST credit to the tax head where it is most beneficial, while limiting allocation to the head where it is less required. In practice, this means that IGST ITC will be preferentially utilised against SGST output liability (to preserve SGST ITC) and allocated less towards CGST output liability (to allow greater utilisation of CGST ITC). Over time, this approach helps equalise the closing balances of CGST and SGST ITC. Further, in situations where both balances are already equal, the tool allocates IGST ITC evenly between the two heads, thereby maintaining the parity in ITC balances.
Problem : The Negative Liability Statement, introduced from October 2024, now permits taxpayers to adjust negative output tax arising when credit notes exceed sales invoices against positive output tax liability in subsequent periods. Depending on the situation, the negative balance may be lower than, equal to, or greater than the current month’s output tax liability. Therefore, a dynamic mechanism is required to monitor the negative output tax reflected in the portal statement, incorporate it into the current month’s computations, and determine the revised closing balances after such adjustments.
Solution: This complex computation is fully automated in the Set off Summary. Users simply need to input the GSTIN wise opening balances. The tool then automatically computes the adjustment against the current month’s output tax liability and determines any remaining closing balance, providing the results in a seamless and hassle free manner.
Problem : Most entities operate with multiple GST registrations across different states or union territories. Consolidating the workings for all such registrations in a single file can be challenging, especially when tracking the additional cash payable both at the entity level and at the individual registration level.
Solution : The Set off summary enables users to input data for up to 100 GSTINs within a single file. This ensures that, on the due date, all relevant information is consolidated in one place, allowing users to easily track the additional cash payable or the closing ITC balances for the entire entity, along with a detailed breakdown for each individual registration.
Problem : While filing GSTR 3B, taxpayers must enter data into a complex 3×3 utilisation matrix before clicking on set off utilisation button on the portal. Any error at this stage can lead to excess ITC utilisation or unnecessary cash outflow. Since most internal workings are not maintained in a 3×3 format especially in cases involving large data volumes or multiple GST registrations, users often face difficulties entering the correct figures on the portal, particularly at the last minute on the due date.
Solution : The output sheet is structured precisely in the same 3×3 format used on the GST portal, allowing users to simply copy the values for each registration directly from the tool to the portal. It generates this matrix for all registrations, ensuring that users only need to log in to the GST portal and enter the data exactly as presented in the tool.
Problem : There are also instances where the reversals reported under Table 4B(1) or 4B(2) of GSTR 3B exceed the ITC availed in Table 4A, resulting in a negative 4C balance. Many taxpayers therefore look for a tool that can dynamically handle both positive and negative 4C situations and deliver accurate computations in all such cases.
Solution : The Set off summary automatically detects whether the 4C value is positive or negative based on the user’s input and applies the appropriate treatment. It either treats the amount as ITC availed for the month or adds it to the output tax liability, delivering a fully dynamic computation without requiring any manual intervention.
Functioning of the tool :
1. Users need to have the following data handy with them GSTIN wise:
a. List of GSTINs
b. Output tax liability payable under forward charge
c. 1% tax liability payable if any under Section 86B
d. RCM liability payable
e. ITC availed as per Table 4C of GSTR 3B
f. Opening ITC
g. Opening cash balance
h. Opening Negative liability balance
2. The users need to enter data as per instruction sheet provided in the tool itself
3. As soon as all the data is appropriately entered as per instructions provided, the output will be generated in the Set off summary sheet instantly, no fancy macro buttons or long waiting time.
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