Adjusting IGST liability equally with cgst and sgst

[Yash Jain]

Suppose their is only IGST liability of 5 lakhs

And cgst-sgst inputs of 4lakh + 4lakh.

Is it possible to set off the IGST liability equally 2.5lakhs each from cgst-sgst.

So that the remaining input is 1.5lakh each.

The auto calculation shows complete utilisation of 4lakh cgst first and then 1lakh sgst. Due to this 3 lakh sgst is accumulated due to which nexr month's sale, we are sometimes need to pay cgst challan.

[Rajagopalan Ranganathan]

Sir,

According to SECTION 49 A of CGST Act, 2017 the input tax credit on account of central tax, State tax or Union territory tax shall be utilised 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 utilised fully towards such payment..

However in my opinion you can utilise IGST credit equally for payment of CGST and SGST in equal proportion.

[KASTURI SETHI]

I support the views of Sh.Ranganathan, Sir.

[Alkesh Jani]

Sir,

In this regards, my point of view is that, as per the amended provisions, the ITC of IGST is to be utilised fully for payment of IGST, CGST and SGST or UGST. As per the query raised and assuming that you do not have balance of IGST, in this case, first you have to utilize CGST credit for CGST and balance if any shall be utilize for IGST. After full utilization of balance CGST credit and still liability of IGST is there than you need to utilize SGST credit for SGST and balance if any shall be utilize for IGST.

Moreover, the provisions and rules implies that utilization of IGST fully after payment of IGST. Therefore, as suggested by you of equal proportion of CGST and SGST for payment of IGST is not the proper utilization of credit and may lead to litigation in future.

Thanks,

With Regards

[Ganeshan Kalyani]

The GSTN has auto offset mode. Sometime it is not sync with the GST provision.

[KASTURI SETHI]

On re-study of all replies and amended Section 49 A of CGST Act, I have no hestitation in changing my opinion. I concur with the views of Sh.Alkesh Jani ji.

[KASTURI SETHI]

Read 'hesitation' above instead of wrongly spelled word.

[Yash Jain]

After detail search on internet, I found an amendment -

As per the GST act amendment 31 of 2018 as on 29 aug 2018, section 49 of the principal act was amended as -

In section 49 of the principal Act,–

(b) in sub-section (5),–

(i) in clause (c), the following proviso shall be inserted, namely:–

“Provided that the input tax credit on account of State tax shall be utilised towards payment of integrated tax only where the balance of the input tax credit on account of central tax is not available for payment of integrated tax;”;

(ii) in clause (d), the following proviso shall be inserted, namely:–

“Provided that the input tax credit on account of Union territory tax shall be utilised towards payment of integrated tax only where the balance of the input tax credit on account of central tax is not available for payment of integrated tax;”.

Therefore, one cannot utilise them equally. You need to exhaust chat first and then only sgst input could be used for IGST.

[Ayush Gupta]

Hi Yash,

Please refer circular number 98/2019 dated 23 April 2019 issued by CBIC. It clarifies that IGST can be used in any proportion.

Therefore, it is possible to set off CGST/SGST liability equally ie ₹ 2.5 lakhs each against IGST balance of ₹ 5 lakh.

Link to the circular has been attached for your reference. http://www.cbic.gov.in/resources//htdocs-cbec/gst/Circular-98-17-2019-GST.pdf;jsessionid=20CA99D39EABF4B3C4F39E3424112099 

Regards,

Ayush

[KASTURI SETHI]

Can Board's circular prevail over Section of an Act ?

[Alkesh Jani]

Dear Ayush ji,

The Circular quoted by you is with regards to utilization of IGST and has no relevance with utilization of CGST/SGST as suggested by you. Moreover, in para 6 of the Circular, it is clearly mentioned that "Therefore, till the new order of utilization as per newly inserted Rule 88A of the CGST Rules is implemented on the common portal, taxpayers may continue to utilize their input tax credit as per the functionality available on the common portal." as on now the portal is suggesting and rights are given to the user to amend the same.

Thanks

With Regards,

[KASTURI SETHI]

Sh.Alkesh Jani Ji,

Your replies in this context are worth saving and should be kept on desktop for ready reference till the present position of the Act is in force. We have to keep track because the Govt. has made frequent changes in this aspect.

[Alkesh Jani]

Sh. Kasturiji Sir,

Thanks, as your words always encourages and your replies are guidelines for everyone. Thanks to TMI also for providing such a great platform.

With Due Regards,

Alkesh Jani

AI Summary

Debate on Adjusting IGST Liability with CGST/SGST Credits: Section 49A Mandates IGST Credit Use First A forum discussion addressed the issue of adjusting IGST liability with CGST and SGST credits. The initial query proposed setting off IGST liability equally from CGST and SGST inputs. Responses varied, with one participant citing Section 49A of the CGST Act, 2017, which mandates utilizing IGST credit first before CGST or SGST. Others pointed out amendments and circulars that influence credit utilization. The consensus leaned towards following the amended provisions, which require exhausting CGST credit before using SGST for IGST payments, although some noted discrepancies with the GSTN portal's auto-calculation. The debate highlighted ongoing changes and interpretations in GST regulations.