How can ITC be utilized under GST
The ITC available in the electronic credit ledger can be used for payment towards output tax under the CGST or SGST or IGST Act(s).
The CENVAT credit of central excise duty or service tax wrongly carried forward as transitional credit or the arrears of central excise duty, service tax can be recovered as central tax liability through the utilization of amounts available in the electronic credit ledger.
Any other amount be it interest, penalty, fees or tax on input supplies (supplies under RCM) etc has to be paid in cash only through the utilization of the amount available in electronic cash ledger (Section 49(3) of the CGST Act, 2017)
The different amounts of input tax credits available in the electronic credit ledger of the registered person shall be utilized as under:
(i) 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 197 State tax, or as the case may be, UT tax, in that order;
(ii) the central or State or UT tax shall first be utilised towards payment of central or State or UT tax and the amount remaining, if any, may be utilised towards the payment of integrated tax;
The input tax credit on account of State or UT 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; (The CGST (Amendment) Act, 2018)
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 towards such payment. (Section 49A of CGST Act, 2017 inserted vide the CGST(Amendment) Act, 2018)
(iii) the central or State tax shall not be utilised towards payment of State or Central tax.
Learn Exports Imports Free, Click here
Click here to know GST rate of your goods or service
Is amendment of GST registration allowed in India?
Cancellation of GST registration in India
Centralized GST registration of services permitted in India?
Retired from business ownership. Fresh GST registration in India?
Import under EPCG after GST
GST on imports by EOUs and SEZs
Changes of operation of SEZ
Interest on delayed payment of tax under GST
Inter State supplies under GST
Meaning of Interstate dealer and seller
Inter State B2C Supply Means
Meaning of term Inter-State Goods and Service Tax (IGST) under GST
Inter and Intra State Level tax under GST
Cargo risks under Imports and Exports
Types of Policies to cover credit risks in Import Export Trade
Causes influencing price of export goods in Export Trade
Credit risks and solutions under International Business
Foreign exchange fluctuations risks and solutions in import export Business
How to overcome the credit risk in an export business?
Does exchange rate of currency effect export business?
Risks and solutions in Export Business
What is the difference between BAF and CAF