New IGST Utilisation and its issues on previous period

Feb 18, 2019 by

Karneeti Part 273
New IGST Utilisation and its issues on previous period
– CA Umesh Sharma

Arjun (Fictional Character): Krishna, Government has recently amended GST law. what changes have been made in ITC which are applicable from 1ST February 2019?
Krishna (Fictional Character): Arjun , some important amendments were made applicable form 1st February 2019 . Let us discuss changes in relation to Input Tax credit by way of insertion of proviso to section 49 and new sections 49A & 49B.

Arjun (Fictional Character): Krishna, what changes were made in Utilisation of IGST credit?
Krishna (Fictional Character): Arjun, 1st and foremost change to remember is : IGST credit needs to be fully utilised first ,before using the credit under CGST/SGST/UTGST. This is the new thumb rule to keep in mind by all taxpayers.
Arjun (Fictional Character): Krishna, what changes were made in Utilisation of CGST credit?
Krishna (Fictional Character): Arjun, CGST Credit should be first utilised to pay IGST liability and then balance if any against CGST liability.
Arjun (Fictional Character): Krishna, what changes were made in Utilisation of SGST credit?
Krishna (Fictional Character): Arjun, SGST Credit should be first utilised to pay IGST liability and then balance if any against SGST liability.
Arjun (Fictional Character): Krishna, which old rule one needs to remember?
Krishna (Fictional Character): Arjun the old rule which prevails over all the above rules is that CGST credit can never be utilised to pay SGST liability and vice versa.
Arjun (Fictional Character): What if old returns are pending of Jan 2019 and Filed after 1st Feb 2019?
Krishna (Fictional Character): This is most important question and is going to create technical debate; we will have to see how GSTN network works on this credit utilisation procedure for pending returns of ITC of previous periods before 1st Feb 19. This new amendment should be applicable from 1stFeb 19 onwards ITC and hence should not be applicable to old period ITC credit utilisation. But it all depends on GSTN to implement this amendment in true spirit.
Arjun (Fictional Character): What should the taxpayer learn from this?
Krishna (Fictional Character): Arjun, one should remember to First Utilise IGST credit. CGST/SGST credits can be utilised as required also tax liability if any needs to be paid accordingly.


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