Introduction: This article discusses in detail about adjustment order of Input tax credit under GST.

Query:  As per rule first IGST has to be adjusted in CGST and then SGST, but because of lack of knowledge, IGST has been adjusted 50-50 against tax liabilities as per below screen shot and submitted GSTR 3B, and deposited challan of balance amount. Now the form GSTR 3B has been Submitted/freezed. But the system is not allowing this adjustment and asking for tax to be deposited. Now What step we should do for next.? Please advise.

Ans.  The order for utilization of tax credit has been provided under section 49(5) of the CGST Act.

If ITC is received on account of IGST

  • It should be used to pay IGST first.
  • Then, any remaining amount should be used to pay CGST.
  • The last priority should be given to payment of SGST.

If ITC is received on account of SGST

  • It should be used to pay SGST first.
  • Then, any remaining amount should be used to pay IGST.
  • Note that you cannot use ITC of SGST to pay CGST. 

If ITC is received on account of IGST

  • It should be used to pay IGST first.
  • Then, any remaining amount should be used to pay CGST.
  • The last priority should be given to payment of SGST.

Accordingly, ITC set off is done in the following manner

  • IGST - IGST, CGST, SGST (in that order)
  • CGST - CGST and IGST
  • SGST - SGST and IGST

(Adjustment / Setoff shall be done 100% against the outstanding tax liability, No 50%-50% setoff is allowed).

The author is a practicing CA based in Delhi and is registered Insolvency Professional. He can also be reached at cavinodchaurasia@gmail.com

Disclaimer: The views expressed in this article are strictly personal. The content of this document are solely for informational purpose. It doesn’t constitute professional advice or recommendation. The Author does not accept any liabilities for any loss or damage of any kind arising out of information in this article and for any actions taken in reliance thereon.


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CA. Vinod chaurasia is a practising CA from New Delhiand is registered Insolvency Professional. His areas of interest are GST, RERA, Insolvency and Bankruptcy Code, He can be reached at cavinodchaurasia @ gmail.com , Mob. +91 9953587496.

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