Set off the amount even no liability of payment

This query is : Resolved

Quick Summary

This discussion clarifies how input tax credit (ITC) is automatically adjusted in the GSTR-3B form, even when your total input tax exceeds your output tax liability. The Goods and Services Tax (GST) rules, specifically Rule 88A and Sections 49A/49B of the CGST Act, mandate a specific order for utilising ITC. IGST credit is prioritised first, followed by CGST and SGST, ensuring that credits are applied against liabilities in a set sequence, which can lead to the appearance of auto-adjustment.

Srinivasa Joshi

Srinivasa Joshi (Querist)
Follow

22 November 2025 Dear Sir
we have filed the 03 B of October 2025, we have no liability of tax during the period, out put of sgst and cgst lesser than input tax igst, sgst and cgst- input is more even though it has auto adjusted to out tax. in credit ledger and in 3b tax para showing that igst, and sgst is adjusted against out of SGST and CGST.
overall out put is less and Input tax is more. but not understand that how it is auto adjusted.
please suggest.
Thanking you
Srininvasa Joshi.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
Follow

22 November 2025 The auto-adjustment you’re seeing in GSTR‑3B happens because of the mandatory order of utilization of Input Tax Credit (ITC) under GST rules. As per Rule 88A and Sections 49A/49B of the CGST Act, IGST credit must be utilized first, then CGST and SGST in a prescribed sequence. That’s why your IGST and SGST credits are automatically set off against CGST/SGST liabilities, even though your total input exceeds output tax.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
Follow

22 November 2025 - Rule 88A (introduced in 2019) governs ITC utilization:
- Step 1: IGST credit is used first against IGST liability.
- Step 2: Remaining IGST credit can be used in any order against CGST or SGST liability.
- Step 3: CGST credit can only be used against CGST liability (and then IGST if any remains).
- Step 4: SGST credit can only be used against SGST liability (and then IGST if any remains).
- Sections 49A & 49B of CGST Act make this order compulsory. You cannot manually override it in GSTR‑3B.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
Follow

22 November 2025 - Since your output tax (CGST + SGST) is less than input tax, the system:
- First adjusted IGST input against IGST liability (if any).
- Then applied remaining IGST input against CGST and SGST liabilities.
- Any leftover SGST/CGST input stays in your credit ledger as unutilized balance.

That’s why you see IGST and SGST credits being “auto-adjusted” in the 3B tax para, even though overall input > output.

Srinivasa Joshi

Srinivasa Joshi (Querist)
Follow

22 November 2025 Thanks sir for valuable reply

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
Follow

22 November 2025 You are welcome.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now