The provisions of Section 49 was amended and Section 49A and Section 49B were inserted vide Central Goods and Services Tax (Amendment) Act, 2018 [hereinafter referred to as the CGST (Amendment) Act] and came into effect from 1st February 2019.

The amendment led to an of accumulation of input tax credit for SGST/UTGST in electronic credit ledger and discharge of liability through electronic cash ledger for CGST in certain scenarios.

To address the situation rule 88A was inserted in the Central Goods and Services Tax Rules, 2017 vide notification No. 16/2019-Central Tax, dated 29th March, 2019 which stated:-

“Order of utilization of input tax credit- Input tax credit on account of integrated tax shall first be utilized towards payment of integrated tax, and the amount remaining, if any, may be utilised 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.”

The Following Table explains the above provisions in a simple manner:-

INPUT UTILIZATION IN GST READ WITH SECTION 49A & 49B AND RULE 88A
  OUTPUT
INPUT CREDIT AVAILABLE IGST CGST SGST CREDIT CARRY FORWARD Comment
LIABILITY PAYABLE 700 600 600
IGST 1,000 700 300 The remaining IGST Input after utilizing Output IGST can be utilized in any order,i.e. Either Output CGST or Output SGST first as beneficial to the assessee
CGST 500 300 200
SGST 500 500
Tax payable through Challan 100
or
  OUTPUT
INPUT CREDIT AVAILABLE IGST CGST SGST CREDIT CARRY FORWARD Comment
LIABILITY PAYABLE 700 600 600
IGST 1,000 700 300 The remaining IGST Input after utilizing Output IGST can be utilized in any order,i.e. Either Output CGST or Output SGST first as beneficial to the assessee
CGST 500 500
SGST 500 300 200
Tax payable through Challan 100

Author Bio

Qualification: CA in Practice
Company: G BEDIA & ASSOCIATES
Location: KOLKATA, West Bengal, IN
Member Since: 10 Oct 2019 | Total Posts: 2

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