RULE 1: The amount of input tax credit will be available for utilization in following priority:
(a) IGST input tax credit shall first be
utilized towards payment of IGST liability and the amount remaining, if any, may be
utilized towards the payment of CGST, SGST/UTGST liabilities in that order
IGST--IGST-->CGST—>SGST—>UTGST
(b) CGST input tax credit shall first be
utilized towards payment of CGST liability and the amount remaining, if any, may be
utilized towards the payment of IGST liability;
CGST--->CGST—>IGST
CGST input tax credit shall not be utilized towards payment of SGST/UTGST liabilities
(c) SGST input tax credit shall first be
utilized towards payment of SGST liability and the amount remaining, if any, may be
utilized towards payment of IGST liability if no CGST credit is available.
SGST --->SGST—>IGST
SGST/UTGST input taxed credit shall not be utilized towards payment of CGST liabilities.
(d) UTGST input tax credit shall first be
utilized towards payment of UTGST liability and the amount remaining, if any, may be
utilized towards payment of IGST liability if no CGST credit is available.
UTGST-->UTGST—>IGST
RULE 2: ITC cannot be utilized for payment of reverse charge liabilities.
RULE 3: ITC can be utilized for payment of tax only
RULE 4: ITC can't be utilized for payment of TDS/TCS/interest/penalty/fee/others.
RULE 5: ITC (Provisional ITC) availed for the current tax period can be utilized only for return related liability of the current tax period. Once, recipient files Valid GSTR 3/5, then any such unutilized/excess ITC would be available for payment of other liabilities as well.
RULE 6: Balance ITC under credit Ledger (other than Provisional ITC for the current tax period) will be used in the following order:
a. Self-assessed tax related to returns of previous tax periods;
Note: Previous month tax liability covers tax liability reported but not paid
b. Self-assessed tax, related to return of current tax period;
Note: Current month tax liability covers:
i) Liability for invoices uploaded for previous months
ii) ITC reversal due to mismatch of invoice in M tax period (say June) for (M-2) (say April) Tax Period
iii) Tax amount increased in M Tax period as a consequence of reduction of liability by supplier in (M-2) tax period but without corresponding reduction in ITC by the receiver (Section 43(6))
iv) Liability for invoices uploaded for current month
c. Any other tax amount payable under the Act or the rules made there under including the demand determined under section 73 or 74.
RULE 7: Provisional ITC for current tax period or ITC for previous tax periods cannot be utilized for payment of liability for the current tax period, if liability arising of return for previous tax period is unpaid.
Previous month tax liability covers:
a. Tax liability reported but not paid
b. Interest/penalty/fee arising out of previous month return period
RULE 8: The amount allowed to be entered for utilization of credit can't be more than the amount of balance available in the credit/cash ledger.
RULE 9: A unique identification number shall be generated at the Common Portal for each debit or credit to the electronic cash or credit or liability ledger and the same will be reflected in the corresponding ledgers of the taxpayer.
RULE 10: Credit availed on input CESS paid on inward supplies will be available for set-off against any output tax liability of Cess only.
There is no Inter head adjustment for Cess Input Tax Credit.
RULE 11: When the taxpayer utilizes the ITC against return related liability, System will adjust the provisional ITC first.
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