GST ITC Utilisation

[Ethirajan Parthasarathy]

Section 49(5) which is in force from 1-7-2017 provides for utilization of IGST ITC, in full for set off against output tax and then towards CGST and SGST in that order.

Section 49B which came into force with effect from 1-2-2019 empowers the government to prescribe order and manner of utilization of ITC

Rule 88A which is effective from 29-3-2019 provides for set off of ITC in “Any manner” subject to condition that IGST ITC must be first fully utilized .

It is settled law that Rules cannot be override the Act.

I request expert’s opinion on above issue.

AI Summary

IGST credit utilization: Rule 88A allows flexible set-off while requiring IGST credit to be exhausted first.
Dispute concerns the order and manner of ITC utilisation where IGST credit exists alongside CGST and SGST liabilities. Rule 88A prescribes flexible set-off "in any manner" subject to the condition that IGST credit must be exhausted first. Practical concern is potential accumulation of CGST credit leading to cash payments despite available CGST credit. Contributors conclude Rule 88A operates within the empowering provision and is a valid, taxpayer-friendly mechanism for ITC set-off.