GST Input Tax Credit (ITC) Calculation Tool

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IGST
CGST
S/UTGST
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Particulars
IGST
CGST
S/UTGST
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GST-ITC

Conditions for utilisation of ITC as per GST law since inception:
- Input Tax Credit on account of IGST shall first be utilized for the payment of IGST liability, followed by payment of CGST liability and then for payment of S/UTGST liability.
- Input Tax Credit on account of CGST shall first be utilized for the payment of CGST liability, and then for payment of IGST liability. ITC of CGST cannot be used for payment of S/UTGST liability.
- Input Tax Credit on account of S/UTGST shall first be utilized for the payment of S/UTGST liability, and then for payment of IGST liability.
ITC of SGST cannot be used for payment of CGST liability.

The flow of ITC utilisation is as shown below:

Liability of IGST CGST S/UTGST
ITC of
IGST 1 2 3
CGST 2 1 x
S/UTGST 2 x 1

03-04-2020
Taxpayers can claim the input tax credit in the GSTR-3B return from February 2020 to August 2020, without applying the rule of capping provisional ITC claims at 10% of the eligible ITC as per GSTR-2A.
While filing the GSTR-3B of September 2020, taxpayers must cumulatively adjust ITC as per the above rule from February 2020. February 2020.

01-01-2020
Revision of extent of provisional input tax credit claims from 20% to 10%.

09-10-2019
The input tax credit that can be availed by a registered person in respect of invoices/debit notes will be restricted to 20% of the eligible credit available in respect of invoices/debit notes as per details uploaded by the suppliers.

23-04-2019
Clarification on the order of ITC utilisation for each tax head:
Further mentioned that, until the new Rule 88A of the CGST Rules is implemented on the GST portal, taxpayers have to follow the facility available on the GST portal. (Such facility was made available from July 2019 returns onwards.)

Insertion of 49A & 49B in the CGST Act
49A. Notwithstanding anything contained in section 49, 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.
49B. Notwithstanding anything contained in this Chapter and subject to the provisions of clause (e) and clause (f) of sub-section (5) of section 49, the Government may, on the recommendations of the Council, prescribe the order and manner of utilisation of the input tax credit on account of integrated tax, central tax, State tax or Union territory tax, as the case may be, towards payment of any such tax.

CT Notification no. 16/2019 dated 29th March 2019, Insertion of Rule 88A
Rule 88A. Order of utilization of input tax credit.- Input tax credit on account of 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 State tax or Union territory tax, as the case may be, in any order:
Provided that 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.

Circular No: 98/17/2019 dated 23 April 2019, order of utilisation of Input Tax Credit.
As per the provisions of Section 49 of the CGST Act, credit of integrated tax has to be utilised first for payment of integrated tax, then Central tax and then State tax, in that order mandatorily. This led to a situation, in certain cases, 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 types of tax (say Central tax) remains unutilised in electronic credit ledger.
The newly inserted rule 88A in the CGST Rules allows utilisation 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 utilised.

However, as per Sec.49 and insertion of Rule 88A,
- Input Tax Credit on account of IGST shall first be utilized for the payment of IGST liability,
followed by payment of CGST liability and/or S/UTGST liability
- 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 S/UTGST can be utilised.

In other words,
1. IGST credit:
First, the credit is available to set off against IGST liability,
The balance (if any) is set off with CGST and SGST/UTGST liability in any order or any proportion.
2. CGST credit:
It is to be utilized against CGST liability and the balance if any with IGST liability.
ITC of CGST cannot be set off against S/UTGST liability.
3. S/UTGST credit:
It can be utilized to set off for S/UTGST liability, and the balance if any with IGST liability.
ITC of S/UTGST cannot be set off against CGST liability.

The new flow of ITC utilisation is as shown below:

Input tax credit on account of IGST Liability CGST Liability S/UTGST Liability
IGST 1 2 - In any order in & in any proportion
3- IGST ITC to be completely exhausted
CGST 5 4 x
S/UTGST 7 x 6

Therefore, it is mandatory to utilise the entire IGST available in electronic credit ledger before utilising ITC on CGST or S/UTGST.
The order of setting off ITC of IGST can be done in any proportion and any order towards setting off the CGST or S/UTGST liability after utilising the same for IGST liability.

Other conditions to claim ITC:
i. The taxpayer must have a purchase invoice or debit note issued by the dealer.
ii. Must have received the goods or services or both.
iii. The supplier has furnished GST returns
iv. The supplier has deposited the tax charged to the government in cash or via claiming ITC.

Illustrations to compehend the changes:

GST Output liability ITC
IGST 700 2800
CGST 1400 210
S/UTGST 1400 210
Total 3500 3220

Set-off under previous system

GST Output liability ITC Set-off Liability to be paid in cash Balance ITC
IGST 700 2800 700 (from IGST ITC) - -
CGST 1400 210 210 (from CGST ITC) 1190 (from IGST ITC) - -
S/UTGST 1400 210 210 (from S/UTGST ITC) 910 (from IGST ITC) 280 -

CGST or S/UTGST liability needs to be first paid with CGST or S/UTGST ITC respectively.

However, as per the new system, the available IGST ITC will have to be completely exhausted before utilising the others and this can be done in the following ways-

Option 1: Set off of unutilised IGST ITC completely towards CGST

GST Output liability ITC Set-off Liability to be paid in cash Balance ITC
IGST 700 2800 700 (from IGST ITC) - -
CGST 1400 210 1400 (from IGST ITC) - 210
S/UTGST 1400 210 700 (from IGST ITC) 210 (from S/UTGST ITC) 490 -

Option 2: Set off of unutilised IGST ITC completely towards S/UTGST

GST Output liability ITC Set-off Liability to be paid in cash Balance ITC
IGST 700 2800 700 (from IGST ITC) - -
CGST 1400 210 700 (from IGST ITC) 210 (from CGST ITC) 490 -
S/UTGST 1400 210 1400 (from IGST ITC) - 210

Option 3: Set-off of unutilised IGST ITC towards CGST & S/UTGST liability in equal proportions.

GST Output liability ITC Set-off Liability to be paid in cash Balance ITC
IGST 700 2800 700 (from IGST ITC) - -
CGST 1400 210 1050 (from IGST ITC) 210 (from CGST ITC) 140 -
S/UTGST 1400 210 1050 (from IGST ITC) 210 (from S/UTGST ITC) 140 -

The manner of apportioning unutilised IGST ITC between CGST and/or SGST liability is at the option of the taxpayer.
It can be done in n number of combinations.
To optimise credit utilisation, it is advisable to follow Option 3.
The apportionment can be in any proportion and in any order. The only condition is to completely utilise IGST ITC before using CGST or S/UTGST ITC.