Changes in GSTR 3B from Feb 2019 onwards (ITC Rules in GSTR 3B for set off Tax credit.)

The government has amended CGST Act 2017 vide CGST Amendment Act 2018 with various changes w.e.f and one of the important amendment was made in Section 49 of CGST Act by introducing new section 49A & 49B after the section 49, which is as under:

49A. Notwithstanding anything contained in section 49, the input tax credit on account of central tax, State tax or Union territory tax shall be utilized towards payment of integrated tax, central tax, State tax or Union territory tax, as the case may be, only after the input tax credit available on account of integrated tax has first been utilized fully towards such payment

Utilization of input tax credit

49B. Notwithstanding anything contained in this Chapter and subject to the provisions of clause (e) and clause (f) of sub-section (5) of section 49, the Government may, on the recommendations of the Council, prescribe the order and manner of utilisation of the input tax credit on account of integrated tax, central tax, State tax or Union territory tax, as the case may be, towards payment of any such tax.

As per new changes Section 49 (5) of CGST Act 2017 speaks about manner of utilizing Input Tax Credit (ITC) for payment of GST output Tax liability, e.g IGST can be Set off against IGST and then CGST and SGST, CGST can be set off against CGST and then against IGST, and SGST can be set off against SGST and then against IGST.

*Impact of amendment*

Rules of Set Off till The Month of January 2019 Rules of Set Off from the Month of February 2019
Payment for First set off from Then set off from Payment for First set off from Then set off from
IGST IGST CGST and SGST IGST IGST CGST and SGST
CGST CGST IGST CGST IGST CGST
SGST SGST IGST SGST IGST SGST

For e.g.*
Say supplier for February 2019 has following data for filing GSTR 3B
*Output tax liability* *ITC Available*
IGST- Rs 2000 IGST- Rs 3000
CGST-Rs 2000 CGST-Rs 2000
SGST- Rs 2000 SGST- Rs 1000
Total- Rs 6000 Total- Rs 6000

Rules of Set Off from the Month of February 2019
IGST CGST SGST
Total liability 2,000 2,000 2,000
Less- IGST Balance 2,000 1,000 0
BALANCE OF LIABILITY” 1,000 2,000
Less-CGST/SGST Balance 1000 1000
Cash Payable 1,000

*Note*

*IGST credit 1st used against IGST, and also IGST 1st need to be set off against CGST and then only CGST credit can be set off against CGST, by amending the section 4B9A supplier need to pay Tax of Rs 100 from his pocket*

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8 Comments

  1. stalin s says:

    Tax office,
    Our country has to sell 90% engineering products of Imported and their reginal billing office in big cities like Mumbai, Pune, Delhi, Bangalore and who are having in this distributor and trading office in these cities only will benefit of this rules. Non other then cities like Chennai Distributor and Traders will not get benefit,Kindly provide best solutions like us.
    Thank you

  2. viji says:

    once the assesse has earned the credit rightfully, it should be left to assesse to utilize in the manner beneficial to trade / business. Govt is tinkering GST too much to the disadvantage of trade. This rule will severely impact working capital of business. GST has created enough disturbance & further adding more each day.

  3. Sunil says:

    In the new amendment every month I keep accumulating my CGST ITC because my IGST ITC is always on the higher side since my IGST sales are less. Does that mean, I need to increase my IGST sales or CGST sales?
    Indirectly GST department is promoting IGST & CGST sales to increase…

  4. CA ROHIT says:

    IN LAST THIRD CHART OF ABOVE I.E. RULLES OF SET OFF FROM FRB-2019, IN THAT EXAMPLE YOU TYPE IN THIRD LINE “ITC” INSTEAD OF “BALANCE OF LIABILITY” AND ALSO SHOWS THE BALANCE OF CGST(ITC) AVAILABLE AFTER COMPLETE SETOFF RS.-1000/- PLEASE CORRECT AND THEN UPLOAD

  5. DEEPAK GUPTA says:

    THERE ARE CHANCES THAT IN ONE HAND WE HAVE TO PAY SGST AND ONTHE OTHER HAND WE ARE HAVING INPUT CREDIT IN
    CGST
    IN CASE
    IGST INPUT 3000
    CGST INPUT 1500
    SGST INPUT 1500
    IGST OUTPUT 2000
    CGST OUTPUT 2000
    SGST OUTPUT 2000
    IN THIS CASE IF CGST INPUT AVAILABLE RS 500
    AND ON THE OTHER HAND WE ARE LIABLE FOR SGST PAYABLE RS 500

    1. CA ROHIT says:

      DEAR DEEPAK,

      THE CONCERN YOU SHOWS THAT EXACTLY GST DEPARTMENT WANTS. AND THAT WILL BE PAYABLE AND AVAILABLE RESPECTIVELY EVERY TIME UNLESS YOU SELL INTERSTATE(IGST) SALES.
      OK.

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