Effect of the provision of Section 49A
Effect of the provision of Section 49A
Section 49A of the CGST Act is regarding the utilization of the input tax credit (ITC). The provision of section 49A is inserted with the amendment of the CGST Act. In this Act, it is prescribed to utilize all the credit of the Integrated Tax first. Then the rest of the credit will be utilized to set off the tax liability of the taxpayer. This was introduced to save the interest of the state. Following is the text of the section 49A of the CGST Act:
“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.”
Let us understand the effect of the provision of the Section 49A with the help of the examples.
Example :
Let us take basic figures for filing the GSTR-3B. Following is the data to be filed in the return:
| Â | Tax Liability(in Lakhs) | Input Tax Credit(in Lakhs) |
| IGST | 100 | 200 |
| SGST | 100 | 50 |
| CGST | 100 | 50 |
Solution:
Let us first see what is done while filing the return until now:
| Â | ITC Available-Â |
IGST (200) |
CGST (50) |
SGST (50) |
To be paid by Cash Ledger |
| Â | Tax Liability | Â | Â | Â | Â |
| IGST | 100 | 100 | – | – | – |
| CGST | 100 | 50 | 50 | – | – |
| SGST | 100 | 50 | – | 50 | – |
![PowerPoint Slide Show - [GSTR-9.pptx] 2018-09-26 11.57.24](https://www.consultease.com/wp-content/uploads/2018/09/PowerPoint-Slide-Show-GSTR-9.pptx-2018-09-26-11.57.24-1024x576.png)
Now let us see how the Input tax credit should be availed as per the provisions of the CGST Act:
| Â | ITC Available-Â |
IGST (200) |
CGST (50) |
SGST (50) |
To be paid by Cash Ledger |
| Â | Tax Liability | Â | Â | Â | Â |
| IGST | 100 | 100 | – | – | – |
| CGST | 100 | 100 | – | – | – |
| SGST | 100 | – | – | 50 | 50 |
| ITC Balance | Â | – | 50 | – | Â |
As we can see, that the amount is not different in both the cases. But the tax of the SGST should be paid from the cash ledger. Even when there is credit in the CGST head. The sequence of the utilization will be the same as before:Â
- IGST- IGST
- IGST- CGST
- IGST- SGST
Also, the ITC of CGST can’t be utilized against the SGST or Vice-versa.
Consultant
