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 | – | |||
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