Deepak Gupta | Feb 6, 2019 |
GST Input Tax Credit Setting off Rules changed from 1st February 2019
The government has amended CGST Act 2017 vide CGST Amendment Act 2018 with various changes w.e.f and one of the important amendment was made in Section 49 of CGST Act by introducing new section 49A after the section 49, which is as under:
Government has eased cash flow concerns of trade industry with relaxations in ITC setoff mechanism vide Notification number 16/2019 – Central Tax dated 29th March 2019 by inserting Rule 88A. Kindly read our next Article on Rule 88A Input Tax Credit Set off Explained with Examples after reading this article to have complete understanding of new ITC rules |
Legal Text
Section 49A has been inserted by Section 21 of CGST Amendment Act 2018
Notwithstanding anything contained in section 49, the input tax credit on account of central tax, State tax or Union territory tax shall be utilized 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 utilized fully towards such payment
Section 21 of CGST Amendment Act 2018 has been presented below for reference
Subsection 5 of Section 49 of CGST Act 2017 speaks about manner of utilising Input Tax Credit (ITC) for payment of GST output Tax liability, e.g IGST can be Set off against IGST and then CGST and SGST, CGST can be set off against CGST and then against IGST, and SGST can be set off against SGST and then against IGST.
Section 49A Over Rules complete Section 49
Section 49(5) of CGST Amendment Act 2017 has been presented below for reference
Impact of amendment
Government has changed the order of setoff by introducing section 49A w.e.f 1st February 2019 and now IGST Credit should be set off fully before taking setting of CGST or SGST Credit.
This has been Explained with a small Example
Conclusion
As per the Existing set of Provisions following Set-off Rules were applicable.
| Payment For | Set-Off-1 | Set-Off-2 |
| IGST | IGST | CGST & SGST |
| CGST | CGST | IGST |
| SGST | SGST | IGST |
As per New Set of Provisions applicable with effect from 1st February 2019 below mentioned set-off rules are applicable.
| Payment For | Set-Off-1 | Set-Off-2 |
| IGST | IGST | CGST & SGST |
| CGST | IGST | CGST |
| SGST | IGST | SGST |
https://www.youtube.com/watchv=qkvAcpegPBc&t=7s
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