New Delhi: Businesses that have accumulated Integrated GST (IGST) credit in their books can settle it against central and state tax dues in any proportion, said the revenue department.
Importers typically pay IGST on goods they bring into the country. IGST is also paid on inter-state movement of goods. This tax is supposed to be set-off against the actual GST paid, or may be claimed as refund in certain cases.
However, confusion prevailed among taxpayers regarding the quantum of utilisation of IGST credit in paying CGST and SGST dues. Considering this, the Central Board of Indirect Taxes and Customs (CBIC) has now clarified that the IGST credit can be used in payment of CGST or SGST in any order or proportion.
The CBIC in March this year had allowed utilisation of input tax credit (ITC) of IGST towards the payment of central GST and State GST, in any order, subject to the condition that the entire IGST liability has been first discharged using the accumulated credit.
However, under GST, the tax levied on consumption of goods or rendering of service is split 50:50 between the central CGST and the state SGST. On inter-state movement of goods as well as imports, an IGST is levied, which accrues to the Centre.
Experts, however, are happy that there wound not be any legal worries in this regard. “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,” said Rajat Mohan, Partner, AMRG and Associates.