We have listed out all possible examples explaining impact of changes in ITC utilisation on or after 1st Feb 2019 with its possible proper explanation as new GST set off rules:

Case 1 : Where supplier is engaged in making only Local Sale and Local Purchase and thus no IGST transaction.

Impact : Since there is no IGST ITC and IGST liability the changes will have no impact on final liability. Hence no Impact.

Case 2 : Where supplier is engaged in making all Local Purchases and all IGST Sales.

Impact : Here the supplier is required to firstly adjust CGST ITC and then SGST ITC against IGST liability. Previously this order was not prescribed and thus before 1st February 2019 supplier could utilised any of the ITC firstly. However otherwise it will have little impact as both the ITC must be of equal amounts and even if of unequal amounts due to transition credit u/s 140 still there is no impact as both the ITC can be utilised fully but in the given order. Hence no impact.

Case 3 : Where supplier is engaged in making all IGST Purchases and all Local Sales .

Impact : Since there is no order in change in order to utilise IGST hence there is no impact in this case. Hence no impact.

Case 4 : Where supplier is engaged in making all IGST Purchases and Local Sales and IGST Sales .

Impact : Here IGST ITC shall be available against IGST liability, CGST liability and SGST liability with no change in order of utilisation and set off of ITC. Hence no impact.

Case 5 : Where supplier is engaged in making all Local Purchases and Local Sales and IGST Sales .

Impact : Here the supplier is required to adjust CGST ITC against CGST liability and SGST ITC against SGST liability. Thereafter remaining CGST ITC shall be firstly utilised to pay IGST liability and then SGCT ITC shall be utilised to pay IGST liability. Previously this order was not prescribed and thus before 1st feb 2019 supplier could utilised any of the ITC firstly. Whereas if there is CGST credit unutilised as on 1st Feb 2019 due to transition credit the SGST ITC may not be fully utilised. However there shall not be any liability due to changes in utilisation. Hence no impact.

Case 6 : Where supplier is engaged in making local as well as IGST purchase and all local sale.

Impact : Here the supplier is having all types of ITCs i.e. IGST, CGST and SGST and liability of CGST and SGST. Previously firstly CGST ITC was utilised towards CGST liability and SGST was utlised towards SGST liability and thereafter IGST ITC was utilised towards remaining CGST and SGST liability. But the order has been changed w.e.f. 1st Feb 2019. Now firstly IGST ITC shall be utilised fully towards CGST liablity and SGST liablity in that order (i.e. first towards CGST and then towards SGST). After exhausting of IGST ITC the CGST ITC shall be utilsied against CGST liablity and SGST ITC shall be utilised against SGST liability. Due to this change in order of utilisation it has impact of net payable tax liability along with unutilised GST ITC as explained through table given below-

Old Scenario:
Credit Input Output Adjustment Ist Adjustment Iind Credit after all Adj Balance Pay
IGST 20 0 0 0
CGST 20 30 Rs 30-20 (CGST C) Rs 10-10 (IGST C) 0 0
SGST 20 30 Rs 30-20 (SGST C) Rs 10-10 (IGST C) 0 0
60 60
New Scenario:
Credit Input Output Adjustment Ist Adjustment Iind Credit after all Adj Balance Pay
IGST 20 0 0 0 0 0
CGST 20 30 Rs 30-20 (IGST C) Rs 10-10 (CGST C) 10 0
SGST 20 30 Rs 30-20 (SGST C) 0 0 10
60 60

Case 7: Where supplier is engaged in making local and IGST purchase and also local sale and IGST sale.

Impact: Here the supplier is having all types of ITCs and liabilities i.e. IGST, CGST and SGST. Previously all ITCs were firstly utilised towards same levy and therafter the ITC of IGST was utilised towards CGST and SGST in that order or CGST or SGST ITC were utilised towards IGST liablity in the order of supplier choice. However after amendment firstly IGST ITC is to be utilised fully towards IGST, CGST and SGST liablities in that order and thereafter CGST ITC to utilised and lastly SGST Credit to be utilised against IGST liability. It impacts the final liability which is explained through below comparative tables-

Old Scenario:
Credit Input Output Adjustment Ist Adjustment Iind Credit after all Adj Balance Pay
IGST 50 20 Rs 20-20 (IGST C) 0 40 0
CGST 30 20 Rs 30-20 (CGST C) 0 10 0
SGST 30 20 Rs 20-20 (SGST C) 0 10 0
110 60
New Scenario:
Credit Input Output Adjustment Ist Adjustment Iind Credit after all Adj Balance Pay
IGST 50 20 Rs 20-20 (IGST C) 0 0 0
CGST 30 20 Rs 20-20 (IGST C) 0 30 0
SGST 30 20 Rs 20-10 (IGST C) Rs 10-10 (SGST C) 30 0
110 60

(Sameer compiled with the help CA Manish Uppal.)

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