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

Order of utilisation of input tax credit: IGST credit must be used for IGST first, then CGST and SGST. Input tax credit on account of integrated tax (IGST) must first be utilised towards payment of integrated tax; any remaining IGST credit may then be utilised towards payment of central tax (CGST) and State tax (SGST) in any order. Input tax credit on account of central or State tax can be utilised towards IGST, central tax or State tax only after the IGST credit has been fully utilised.