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

IGST credit utilisation now mandated, causing accumulation of CGST credits and cash outflow to meet SGST liabilities.
Section 49A mandates that IGST credit be applied first against tax liabilities, a rule intended to avoid apportionment complexity. This priority causes CGST credits to accumulate while certain SGST liabilities must be met in cash, producing an immediate working-capital strain despite available overall input tax credit.