Clarification in respect of utilization of input tax credit under GST - GST - States - 98/17/2019-GST 28/2019 (ST/Tech//2019/4884)

Circular No. 98/17/2019-GST 28/2019 OFFICE OF COMMISSIONER OF STATE TAX CHHATTISGARH, ATAL NAGAR, RAIPUR No. /ST/Tech//2019/4884 Atal Nagar, Raipur Dated : 29.04.2019 To, Special Commissioner Additional Commissioners/ Joint Commissioners/Deputy Commissioners/ Assistant Commissioner/State Tax Officers/ State Tax, Chhattisgarh (All) . Subject: Clarification in respect of utilization of input tax credit under GST - Reg. Section 49 was amended and Section 49A and Section 49B were inserted vide Chhattisgarh Goods and Services Tax (Amendment) Act. 2018 [hereinafter referred to as the CGGST (Amendment) Act]. The amended provisions came into effect from 1 st February 2019. 2. The Central Board of Indirect Taxes Customs (CBIC) has issued circular No. 98/17/2019-GST dated 23 rd April, 2019 to address various issued regarding challenges being raced by taxpayers in respect of utilization of input tax credit. In accordance with circular issued by CBIC and in order to ensure uniformity in the implementation or the provisions of the law across the State, the Commissioner, in exercise or its powers conferred by section 168 or the CGGST Act. hereby clarifies the issues raised as below. 3. The newly inserted Section 49A of the CGGST Act provides that the input tax credit or Integrated tax has to be utilized completely before input tax credit or State tax can be utilized for discharge of any tax liability. Further. as per the provisions of section 49 of the CGGST Act. credit of Integrated tax has to be utilized first for payment of Integrated tax, then Central tax and then State tax in that order mandatorily. -This led to a situation, in certain eases. where a taxpayer has to discharge his tax liability on account of one type of tax (say State tax) through electronic cash ledger. while the input tax credit on account of other type or tax (say Central tax) remains un-utilized in electronic cred it ledger. 4. The newly inserted rule 88A in the CGGST Rules allows utilization of input tax credit of Integrated tax towards the payment of Central tax and State tax. or as the case may be. Union territory tax, in any order subject to the condition that the entire input tax credit on account of Integrated tax is completely exhausted first before the input tax credit on account of Central tax or State /Union territory tax can be utilized. It is clarified that after the insertion or the said rule, the order of utilization of input tax credit will be as per the order (of numerals) given below: Input tax Credit on account of Output liability on account of Integrated tax Output liability on account of Central tax Output liability on account of State tax / Union Territory tax Integrated tax (I) (II) - In any order and in any proportion (III) Input tax Credit on account of Integrated tax to he completely exhausted mandatorily Central tax (V) (IV) Not permitted State tax / Union Territory tax (VII) Not permitted (VI) 5. The following illustration would further amplify the impact of newly inserted rule 88A of the CGST Rules: Illustration: Amount of Input tax Credit available and output liability uuder different tax heads Head Output Liability Input tax Credit Integrated tax 1000 1300 Central tax 300 200 State tax / Union Territory tax 300 200 Total 1600 1700 Option 1: Input tax Credit on account of Discharge of output liability on account of Integrated tax Discharge of output liability on account of Central tax Discharge Of Output liability on account of State taxi Union Territory tax Balance of Input tax Credit Integrated tax 1000 200 100 0 Input tax Credit on account of Integrated tax has been completely exhausted Central tax 0 100 - 100 State tax Union territory tax 0 - 200 0 Total 1000 300 300 100 Option 2: Input tax Credit on account of Discharge of output liability on account of Integrated tax Discharge of output liability on account of Central tax Discharge of output liability on account of State tax / Union Territory tax Balance of Input tax Credit Integrated tax 1000 100 200 0 Input tax Credit on account of Integrated tax has been completely exhausted Central tax 0 200 - 0 State tax Union territory tax 0 - 100 100 Total 1000 300 300 100 6. Presently, the common portal supports the order or utilization of input tax credit in accordance with the provisions before implementation of the provisions of' the CGGST (Amendment) Act i.e. pre-insertion of Section 49A and Section 49B of the CGGST Act, Therefore, till the new order of utilization as per newly inserted Rule 88A of the CGCST Rules is implemented on the common portal, taxpayers may continue to utilize their input tax credit as per the functionality available on the common portal. 7. It is requested that suitable trade notices may be issued to publicize the contents of this circular. 8. Difficulty if any, in implementation or the above instructions may please be brought to the notice of this office. (Reena Babasaheb Kangale) Commissioner, State Tax Chhattisgarh, Raipur