System not in confirmation with Rule 39(e) of CGST Rules

[RadheyShyam Mangal]

As per Section 20 of the CGST Act, input tax credit on account of IGST Credit can be distributed by Input Service Distributor as IGST or CGST.

As per Rule 39(e) of CGST Rules, which prescribes procedure for distribution of credit by Input Service Distributor, says input tax credit on account of IGST can be distributed as IGST itself.

The GSTR-6 available online has one loophole i.e. it is not according to Rule 39(e) of CGST Rules because in case of ISD and recipient of credit are in the same state it doesn't have column for distribution of IGST credit as IGST credit.

What should be done.

If I go ahead and distribute IGST credit as CGST credit in the same state then I will be complying Section 20 but there will be violation of Rule 39(e) of CGST Rules.

Though we all know Rules cannot override Act.

Please opine on the same

AI Summary

Discrepancy Between CGST Act Section 20 and Rule 39(e) on IGST Credit Distribution by Input Service Distributors An issue was raised regarding a discrepancy between Section 20 of the CGST Act and Rule 39(e) of the CGST Rules concerning the distribution of IGST credit by Input Service Distributors (ISD). While Section 20 allows IGST credit to be distributed as IGST or CGST, Rule 39(e) mandates it be distributed as IGST. The GSTR-6 form lacks a provision for distributing IGST credit as IGST when ISD and recipient are in the same state. It was suggested that rules cannot override the Act, and the GST Council may amend the rule if the issue is highlighted.