Utilisation of input tax credit (Happy GST SERIES – 38) by CA Rajender Arora
Sub Section (1) of Section 49A & Section 49B of CGST Act, 2017 read with Rule 88A of CGST Rules, 2017 governs the provision for Utilisation of input tax credit subject to certain conditions & Order of utilization of input tax credit. Rule 88 of CGST Rules, 2017 governs the provision for Identification number for each transaction.
- What is the advice for Utilisation of input tax credit?
If there is balance in CGST & SGST, liability is of IGST, then instead of just setting off the liability as suggested by the portal itself, due care shall be given that IGST liability shall be manually adjusted and set off in such a manner that balance in CGST & SGST shall remain same so that in times to come there should be sufficient balance in CGST & SGST to set off its own liability. There should not be such a case where cash payment is required to be done in one head (Either of the CGST or SGST) and balance is lying on portal in another head (Either of the CGST or SGST).
- What is the Order of utilization of input tax credit?
As per Section 49A of CGST Act, 2017, Notwithstanding anything contained in section 49, 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.
As per Section 49B of CGST Act, 2017, Notwithstanding anything contained in this Chapter and subject to the provisions of clause (e) and clause (f) of sub-section (5) of section 49, the Government may, on the recommendations of the Council, prescribe the order and manner of utilisation of the input tax credit on account of integrated tax, central tax, State tax or Union territory tax, as the case may be, towards payment of any such tax.
As per Rule 88A of CGST Rules, 2017, 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.
- What are the Provisions of sub-section (5) of section 49 of CGST Act, 2017?
As per Sub Section (5) of Section 49 of CGST Act, 2017, the amount of input tax credit available in the electronic credit ledger of the registered person on account of—
(a) 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 as the case may be, Union territory tax, in that order;
(b) the central tax shall first be utilised towards payment of central tax and the amount remaining, if any, may be utilised towards the payment of integrated tax;
(c) the State tax shall first be utilised towards payment of State tax and the amount remaining, if any, may be utilised towards payment of integrated tax:
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;
(d) the Union territory tax shall first be utilised towards payment of Union territory tax and the amount remaining, if any, may be utilised towards payment of integrated tax:
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;
(e) the central tax shall not be utilised towards payment of State tax or Union territory tax; and
(f) the State tax or Union territory tax shall not be utilised towards payment of central tax.
- What is Identification number and it is applicable for which transaction?
As per Rule 88 of CGST Rules, 2017,
(1) A unique identification number shall be generated at the common portal for each debit or credit to the electronic cash or credit ledger, as the case may be.
(2) The unique identification number relating to discharge of any liability shall be indicated in the corresponding entry in the electronic liability register.
(3) A unique identification number shall be generated at the common portal for each credit in the electronic liability register for reasons other than those covered under sub-rule (2).
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