Impact of Section 49A On Working Capital limits.

[TirumalaRao Vuppala]

Dear Sirs,

What is the impact of Section 49A on working capital limits? If IGST not available to adjust to output tax of CGST & SGST, we will be pay by way of Cash. As per my knowledge up to 31-01-2019 ITC GST adjustment is correct. What is the use to dealers as per new adjustment system of GST?

AI Summary

Section 49A of GST Act Affects Working Capital by Prioritizing IGST Credits, Increasing SGST Cash Outflow The discussion addresses the impact of Section 49A of the GST Act on working capital limits, particularly regarding the use of Integrated Goods and Services Tax (IGST) credits. It explains that Section 49A mandates the utilization of IGST credits first, potentially leading to an accumulation of Central Goods and Services Tax (CGST) credits and increased cash outflow for State Goods and Services Tax (SGST) liabilities. An illustration is provided to demonstrate the changes in credit utilization before and after the insertion of Section 49A, highlighting the need for additional cash payment for SGST under the new system.