The criteria for setting off of Input Tax Credit (ITC) has been changed under GST thru Central Goods & Services Tax (Amendment) Act 2018, which has been made effective from 1st February 2019.
As per old rules, following was the priority of set-off of ITC was as below:
- For CGST Output – First set off thru ITC of CGST, then IGST
- For SGST Output – First set off thru ITC of SGST, then IGST
- For IGST Output – First set off thru ITC of IGST, then CGST & then SGST
As per CGST (Amendment) Act 2018, the priority of set-off of ITC is as below:
- For CGST Output- First set off thru ITC of IGST, then CGST
- For SGST Output – First set off thru ITC of IGST, then SGST
- For IGST Output – First set off thru ITC of IGST, then CGST & then SGST
Following new sections have been inserted thru CGST (Amendment) Act 2018:
As per Section 49A,
Notwithstanding anything contained in section 49, the input tax credit on account of central tax, State tax or Union territory tax shall be utilised 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 utilised fully towards such payment.
As per Section 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.
Let us understand the same with help of an example:
| Head | Output Liability | Input Tax Credit available (ITC) |
As per old Set-off rules | As per revised Set-off rules (applicable from 1st Feb 2019) | ||
| Paid thru ITC | Paid thru Cash | Paid thru ITC | Paid thru Cash | |||
| CGST | 800 | 500 | CGST- 500 IGST- 300 |
0 | IGST- 800 | 0 |
| SGST | 400 | 200 | SGST-200 IGST-200 |
0 | SGST- 200 | 200 |
| IGST | 0 | 800 | – | 0 | – | |
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GST Ineligibility of Tax Credit During Purchases how to adjust.
sir, in march march month sales of B2C of 40 lakhs & this amount showned two times, one time in B2C large as another one time in B2C total amount .And tax also paid. now can adjust tax amount in subsequent months or we need to apply refund
In jewellery firm only input itc available outoput is LUT Bond then how can we set off the cgst igst and sgst ledger
If a trader purchase througst igst and also sgst and cgst but sale through only sgst and cgst then how cgst adjusted
We have ITC of IGST rs. 80000. now in feb we have to paid CGSt 34000 and SGST 34000. Now We have filled all this data in 3B upon adjustment of liability , It has not adjusted ITC of IGST against CGST, and it shows amount payable of rs 34000. Now is it correct,Pl advice
As per new rule of ITC claim, what happen if ITC of IGST is zero & Output is eight hundred in above example.