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GST ITC utilisation

yash (accountant) (519 Points)

10 August 2020

We have following situation for month.

	Mar-20
		IGST	CGST	SGST
OUTWARDS		58993309	2732728	2732728

INWARD		29764318	14314567	14314567

PAYMENT		599857	2732728	2732728

Above payment is possible as per Rule-88A.

if not then why?

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10 Replies

Sagar Patel (Tax and Business Consultant) (11611 Points)
Replied 10 August 2020

Above payment is not possible as per Rule 88A
First set off CGST/SGST credit with respective head,than after setoff if any balance that it can be set of against IGST output.

Your payment will be IGST 60,65,313/-

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yash (accountant) (519 Points)
Replied 10 August 2020

AS per rule 88A first set-off IGST and after utilizing IGST, CGST& SGST set-off as the case may be. We are fully utilizing the IGST credit.

Sagar Patel (Tax and Business Consultant) (11611 Points)
Replied 10 August 2020

As per Rule 88A first utilise IGST Credit, means IGST credit (i.e credit from Inward supply) is to first set of against IGST output, than if any balance that to be set of against CGST/SGST outputting.
but in your case IGST credit of input of RS.29764318 is already setoff against IGST output, So, there is no balance credit of IGST to be set of against CGST/SGST output liability.

If your Inward of IGST is higher than IGST output than situation of rule 88A arise. In your case its Reverse position.

CA ABHAY GUPTA (Practice) (3230 Points)
Replied 10 August 2020

@ yash your treatment is correct...
The newly inserted rule 88A in the CGST Rules allows utilisation of input tax credit of integrated tax towards the payment of Central tax and State tax, or as the case may be, Union Territory tax, in any order subject to the condition that the entire input tax credit on account of integrated tax is completely exhausted first before the input tax credit on account of Central tax or State/Union Territory tax can be utilised.

Sagar Patel (Tax and Business Consultant) (11611 Points)
Replied 10 August 2020

@ CA Abhay Gupta ji

Kindly check against
Input tax credit of IGST is already going to be exhaust against output tax liability of IGST only.
(IGST output is higher than Input) So, there is no balance left to be used for CGST/SGST output.

it's not a case of Rule 88A (it's reverse case)

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yash (accountant) (519 Points)
Replied 11 August 2020

Dear professionals,

In above case, we want to pay some SGST instead of full payment of IGST,

anything is possible?

Sagar Patel (Tax and Business Consultant) (11611 Points)
Replied 11 August 2020

@ Mr.Yash
it's not possible
You have to pay Full amount as IGST only.

yash (accountant) (519 Points)
Replied 11 August 2020

Thanks for advise @ Sagar Patel & @ CA Abhay Gupta

Ragavan Vijaya Kumar (6 Points)
Replied 13 August 2020

Refer 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.]

Refer Notification No : 16 / 2019 dt 29.03.2019 - page no 11

Hope you all Understand. I think it is possible.

Attached File : 3157232 20200813115129 notfctn 16 central tax english 2019 1 .pdf downloaded: 76 times