Utilization of Electronic Cash Ledger in GST

This query is : Resolved

Mahesh (Querist)
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21 April 2025 Hi,

In Feb 2025. I needed additional cash to setoff IGST payment on self assessment basis quarterly return.

But in March 2025. while filing GSTR 3b it is taking full IGST (Jan+Feb+march month) to set off IGST. But in feb 2025 I paid IGST in cash to setoff IGST liability because not enough IGST credit is available. So my question is the cash deposited of IGST payment and IGST credit available i can adjust to set off IGST payment in GSTR3B March 2025 and balance IGST credit to set off CGST payment?

So For Eg: (jan+feb+march) GSTrB:

Total IGST to payable : 1000

IGST credit available: 2000

IGST paid in cash for feb 2025: 400

So in march gstrb return can i adjust it as below.

IGST to be paid: 1000 can be set off in 600 (credit available) +400 (Cash deposited) and reamning 1400 in Cgst and Sgst.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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12 August 2025 Great question! Here’s how the utilization of Electronic Cash Ledger and Input Tax Credit (ITC) works under GST, especially when you have both cash payment and credit available:

Key Points on GST Electronic Cash Ledger & ITC Utilization:
Set-off order of GST liability (Section 49 of CGST Act):

The tax liability must be paid in the following order:

IGST credit first to set off IGST liability.

Then, if IGST credit is insufficient, CGST credit can be used to pay IGST liability.

Then SGST credit to pay IGST liability.

If still insufficient, then cash can be used.

For CGST/SGST liability, the same applies with respective credits.

Cash ledger payment cannot be adjusted against CGST or SGST liability.

Cash paid for IGST can be used only to pay IGST liability.

You cannot use IGST cash payment to offset CGST or SGST liability.

ITC is always adjusted first before using cash.

Applying this to your example:
Total IGST liability for Jan+Feb+Mar = Rs. 1,000

IGST credit available = Rs. 2,000

IGST cash paid in Feb = Rs. 400

How will the system adjust?

The entire IGST liability of Rs. 1,000 will be adjusted from the IGST credit balance of Rs. 2,000.

Since you have sufficient IGST credit (2,000 > 1,000), the system will use Rs. 1,000 from ITC first.

The cash deposit of Rs. 400 in February remains in the cash ledger balance and is NOT automatically used for this liability, because ITC is sufficient.

The cash ledger balance of Rs. 400 can be used in future GST payments when ITC is insufficient.

You cannot adjust cash deposited for IGST payment against CGST or SGST liability.

Important:
You cannot adjust IGST cash payment against CGST or SGST liability. The cash ledger is tagged to the tax head under which it was paid.

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