UTILISATION OF ITC AFTER INSERTION OF SECTION 49A AND 49B
By: – Nitika Aggarwal
Goods and Services Tax – GST
Dated:- 21-2-2019
UTILISATION OF ITC AFTER INSERTION OF SEC 49A
In midst of changes vide CGST Amendment Act, 2018 there is an insertion of new sections i.e. 49A and 49B in CGST Act, 2017, which has paved its way in new direction. Let's analyze the impact of the same on the industry:-
Section 49(5) of CGST Act, 2017 provides the set off policies against the liabilities of CGST, IGST, SGST and UTGST from Input tax credit available. Prior to amendment in CGST Act, 2017 via CGST Amendment Act, 2018, Section 49(5) of the act reads as under:-
Section 49(5) of CGST Act, 2017:-
“(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
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IGST
SGST & UTGST
SGST
SGST
IGST
CGST
UTGST
UTGST
IGST
CGST
Following are the examples for better understanding the aforesaid provision of the act:-
Example 1:-
When ITC of IGST is available and IGST liability is NIL
ITC
ITC Amount
Liability
1st Adjustment
2nd Adjustment
Balance to be Paid in Cash
Balance ITC
IGST
200
–
–
–
–
CGST
200
350
Rs.200-200 (CGST )
₹ 150-150 (IGST)
–
–
SGST
200
250
₹ 200-200 (SGST )
₹ 50-50 (IGST)
–
–
Example 2:-
When ITC of IGST is available along with the liability of IGST
ITC
ITC Amount
Liability
1st Adjustment
2nd Adjustment
Balance to be Paid in Cash
Balance ITC
IGST
200
50
Rs. (50-50)
(IGST)
–
–
150
CGST
200
350
₹ 200-200 (CGST )
₹ 150-150 (IGST)
–
–
SGST
200
250
₹ 200-200 (SGST )
50
–
However, the aforesaid position of set off against the ITC available after insertion of section 49A and 49B vide CGST Amendment Act, 2018 has been changed. Let's ana
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f any such tax.".
Payment for
First set off from
Then set off from
IGST
IGST
CGST and SGST
CGST
IGST
CGST
SGST
IGST
SGST
Example 1:-
When ITC of IGST is available and there is no liability of IGST
ITC
ITC Amount
Liability
1st Adjustment
2nd Adjustment
Balance to be Paid in Cash
Balance ITC
IGST
200
0
–
–
–
–
CGST
200
350
₹ 200-200 (IGST )
₹ 150-150 (IGST)
–
50
SGST
200
250
₹ 200-200 (SGST )
50
–
Example 2:-
When ITC of IGST is available along with the liability of IGST
ITC
ITC Amount
Liability
1st Adjustment
2nd Adjustment
Balance to be Paid in Cash
Balance ITC
IGST
200
50
(50-50)
IGST
–
–
–
CGST
200
350
Rs (150-150)
(IGST )
₹ 200-200 (CGST )
–
–
SGST
200
250
₹ 100-100 (SGST)
–
50
–
Now, this shall lead to accumulation of input tax credit on account of CGST, SGST and UTGST, which was fully utilized prior to insertion of section 49A. Cash flows of trade dealers might wedged
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