How to adjust the By mistake GST Cess Payment in GST Output Tax Return?

This query is : Resolved

Gulam Qutbuddin (Querist)
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27 April 2023 Dear Sir/Madam,

Can we claim/adjust Input GST Cess Paid in GST Output Tax Return Or not.
Please advice the same . I shall be very thankful to you for the same.

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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09 July 2024 Yes, you can claim or adjust the Input GST Cess paid against the GST Output Tax liability, but only under specific conditions. The rules for claiming Input Tax Credit (ITC) for GST Cess are outlined under the GST law.

### Key Points to Note:

1. **ITC on Cess**: Input GST Cess can only be utilized against the payment of output GST Cess. It cannot be used against the payment of IGST, CGST, or SGST/UTGST liabilities.

2. **Utilization Hierarchy**:
- ITC of GST Cess can be used only to pay the GST Cess.
- It cannot be used to pay any other kind of GST liability.

### Example Scenario:

#### Situation:
- **Input GST Cess Paid**: ₹10,000
- **Output GST Cess Liability**: ₹8,000
- **Other Output GST Liability**: ₹20,000 (CGST + SGST/IGST)

#### Claiming Input GST Cess:
1. **Against Output GST Cess**:
- You can claim the ₹10,000 Input GST Cess to offset the ₹8,000 Output GST Cess liability.
- After this adjustment, you will have ₹2,000 of unused Input GST Cess.

2. **Against Other GST Liabilities**:
- The remaining ₹2,000 Input GST Cess cannot be used to offset the ₹20,000 of other Output GST liabilities (CGST, SGST, or IGST).

### Filing in GSTR-3B:

1. **In GSTR-3B**:
- Under the **"ITC Available"** section, you will declare the ITC on GST Cess.
- Under the **"Tax Payable"** section, you will declare the Output GST Cess liability.

2. **Utilization**:
- Ensure that the ITC on GST Cess is applied only against the Output GST Cess liability in the relevant fields.

### Practical Steps:

1. **Accurate Record-Keeping**:
- Keep accurate records of all GST Cess paid on inputs and output GST Cess liabilities.

2. **Regular Reconciliation**:
- Regularly reconcile the Input GST Cess with Output GST Cess liabilities to ensure proper utilization and compliance.

### Conclusion:
Yes, you can claim Input GST Cess paid, but it can only be adjusted against the Output GST Cess liability. It is important to keep detailed records and ensure that the utilization is done correctly in your GST returns to avoid any compliance issues. If you have any specific scenarios or need further assistance, consulting with a GST professional or using GST software for accurate calculations might be helpful.