Goods and Services Tax

UTILISATION OF ITC AFTER INSERTION OF SECTION 49A AND 49B

Goods and Services Tax – GST – By: – Nitika Aggarwal – 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, or as the case may be, Union territory tax, in that order; (b) the cent

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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 analyze the same. The aforementioned sections have been reproduced as under for the sake of ready reference:- Utilisation of input tax credit subject to certain conditions 49A. Notwi

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TC 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 or jammed due to the aforementioned changes in the act. In case of any query/information, feel free to write back to us. (DISCLAIMER: The views expressed are strictly of the author and AJA. The contents of this article are solely for informational purpose. It does not constitute professional ad

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