TaxTMI 
TaxTMI 
An assessee claimed ineligible ITC (CGST and SGST). After knowing that the same is not eligible for ITC he has reversed the same in GSTR 3B. However, since he does not have enough credit in CGST and SGST, he has reversed the same using IGST balance available. Is this valid or he should have paid CGST and SGST through challan. Sec 49(5) allows IGST ITC to be used to pay CGST and SGST.
Reversal of ineligible ITC
12 Aug 2019 
8 Replies 
5076 Views Asked by
Use of IGST credit to adjust CGST/SGST balances contested; permissive administrative reading vs strict output tax limitation.
A taxpayer reversed ineligible CGST and SGST ITC by utilising IGST balance because CGST/SGST credits were exhausted. Forum respondents largely view this as permitted under the rule allowing IGST to be applied against CGST and SGST liabilities and by analogy to pre GST credit usage, while a dissenting view argues that reversal is not payment of output tax and that post utilisation adjustment via IGST may contravene the prescribed credit application hierarchy. (AI Summary)
A taxpayer reversed ineligible CGST and SGST ITC by utilising IGST balance because CGST/SGST credits were exhausted. Forum respondents largely view this as permitted under the rule allowing IGST to be applied against CGST and SGST liabilities and by analogy to pre GST credit usage, while a dissenting view argues that reversal is not payment of output tax and that post utilisation adjustment via IGST may contravene the prescribed credit application hierarchy. (AI Summary)