Rules 88A :Order of utilization of input Tax Credit- Restore to old method of set off of Input tax credit

New GST Rules 88A as per Notification no 16/2019 dated : 29th March 2019 has restore the set of Input Tax Credit utilization in the old method with minor modification in order of set off.

Its a big relief to tax payer , no more there will be any blockage of working capital .

New GST Rule 88A inserted as per the notification 16/2019 dated : 29th March 2019

Rule 88A: Order of Utilization of input tax credit – Input tax credit on account of integrated tax shall be first be utilized towards payment of integrated tax and the amount remaining, if any , may be utilized towards the payment of central tax and State tax or Union territory tax, as the case may be, in any order :

Provided that 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.  

In the above explanation in any order  means IGST input tax credit after adjusting with IGST output liability , remaining balance of IGST input tax credit can be set off with any head of tax liability (CGST / UTGST or STGST) in any order.

In second proviso it is mentioned that input tax credit available on account of integrated tax need to be first utilized fully. After that only credit available on account of central tax, State tax or Union territory tax can be utilize.

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Company: Komandoor & Co LLP
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Fellow Chartered Accountant having 10 years of experience in the field of Internal Audit and Indirect Taxation. View Full Profile

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