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Businesses can use IGST credit to settle centre, state tax dues: CBIC

Importers typically pay IGST on goods they bring into the country. Also IGST is paid on inter-state movement of goods

Press Trust of India  |  New Delhi 

IGST
Under GST, the tax levied on consumption of goods or rendering of service is split 50:50 between the centre (CGST) and the state (SGST)

Businesses that have accumulated Integrated (IGST) credit in their books can settle it against central and state tax dues in any proportion, the revenue department has said.

Importers typically pay on goods they bring into the country. Also is paid on inter-state movement of goods. This tax is supposed to be set-off against the actual paid, or may be claimed as refund in certain cases.

The Central Board of Indirect Taxes and Customs (CBIC) in March had allowed utilisation of (ITC) of towards the payment of Central and State GST, in any order subject to the condition that the entire IGST liability has been first discharged using the accumulated credit.

However, there were confusion among taxpayers regarding the quantum of utilisation of in paying and dues.

The has now clarified that the can be used in payment of or in any order or proportion.

Under Goods and Services Tax (GST), the tax levied on consumption of goods or rendering of service is split 50:50 between the centre (CGST) and the state (SGST).

On inter-state movement of goods as well as imports, an IGST is levied, which accrues to the centre.

Ideally, there should be 'nil' balance in the at the end of a fiscal since the amount should be used for payment of and

As some businesses are ineligible to claim the benefits of (ITC), the balance gets accumulated in the

AMRG and Associates Partner Rajat Mohan said, "This clarification from government would help businesses and taxpayers to swim out of the gap created between legal framework and GST network, now taxpayers can continue to work according to the functionality of GSTN without worrying for any legal consequences."

EY Tax Partner Abhishek Jain said, "This was a much needed clarification as this should help bring to rest the varied interpretation apprehended by industry on the utilisation of IGST credit".

First Published: Fri, April 26 2019. 14:00 IST
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