Can IGST liability be set off against ITC of CGST and SGST?

[gvenugopal g]

Dear Experts,

We are GST registered manufacturing establishment based in Tamilnadu. We wish to open a branch in some other state and get GSTN, to procure some raw materials locally and store there and send the same to HO as per required quantities.

The branch purchase the raw materials locally and pay SGST and CGST. Whenever they transfer the materials to HO they raise Tax Invoice and charge IGST.

Kindly let us know the above IGST liability can be set off against ITC of CGST and SGST?

Thanks & Regards: G. VENUGOPAL

[KASTURI SETHI]

Yes but strings attached to. See Notification No.16/2019-CT dated 29.3.19 wherein Rule 88 A has been inserted in CGST Rules, 17 ..

“Rule 88A. Order of utilization of input tax credit. - Input tax credit on account of integrated tax shall first be utilised towards payment of integrated tax, and the amount remaining, if any, may be utilised towards the payment of central tax and State tax or Union territory tax, as the case may be, in any order :

Provided that 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.”.

IGST ITC is to be utilised first towards IGST and, thereafter, remaining of IGST towards CGST & SGST.

Order has to be maintained and it (order) cannot be reversed.

[gvenugopal g]

Dear Sethi Ji,

Thank you very much for your explanation in brief with notification reference.

AI Summary

Manufacturing firm clarified on IGST liability set-off using ITC of CGST and SGST under Rule 88A, CGST Rules. A manufacturing company in Tamilnadu, registered under GST, inquired about setting off IGST liability against the input tax credit (ITC) of CGST and SGST when transferring materials to their head office. An expert responded, referencing Notification No.16/2019-CT, which introduced Rule 88A in the CGST Rules. This rule mandates that ITC from integrated tax (IGST) must first be used to pay IGST, and any remaining credit can be applied to central and state taxes. The order of utilization is fixed and cannot be altered. The inquirer expressed gratitude for the clarification.