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GST set off rule in case of itc reversal

Ajnas (Student) (844 Points)

11 February 2021

During the month of january, only itc IGST reversal liability Rs. 120000, in electronic credit ledger IGST input is nil but CGST and SGST input Rs. 700000 and Rs. 600000 we can utilise this input for paying igst input reversal liability? If possible what is order of utilisation what is closing balance of cgst and sgst after utilisation?

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6 Replies

CA SEEMA AGARWAL (Chartered Accountant) (414 Points)
Replied 11 February 2021

No you cannot utilize CGSt and SGST for IGST liability payment..IGST can be setoff only through IGST

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Ajnas (Student) (844 Points)
Replied 11 February 2021

That means reversal of input cgst, input sgst input and igst only through same input(igst against, sgst against sgst and cgst against cgst ) or same can be made through payment of challan am i right?

CA SEEMA AGARWAL (Chartered Accountant) (414 Points)
Replied 11 February 2021

IGST can be used for set off IGST first then CGST and then SGST and csgt for CGSt and SGST for SGST...

CA Subba Reddy Bonam (Practising chartered accountant) (496 Points)
Replied 11 February 2021

Dear Ajnas,

You can utilise CGST credit for payment of IGST if there is no ITC balance in IGST credit. After utilisation of CGST credit for CGST liability the balance can be used for IGST liability.

Further SGST credit can be utilised for IGST liability only when the balance in CGST credit not there to utilise IGST liability.

Legal extract for your reference. Section 49 (5);

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;