CGST & SGST PAID AS IGST

Hi Prashant,

Here’s a clear explanation and suggestion based on your situation:

Situation Summary:

• You paid IGST instead of CGST & SGST in FY 19-20.

• You rectified this in the annual return by paying CGST & SGST in cash.

• You did not claim refund of the wrongly paid IGST because you utilized it against ineligible ITC adjustmentin 2020-21.

• Now you want to know if you can adjust the cash paid CGST & SGST against the ineligible ITC liabilitywhile filing the annual return, to avoid losing Rs 10 lakh.

Key Points:

1. IGST Paid Instead of CGST & SGST
   If IGST was wrongly paid instead of CGST & SGST, ideally you should claim refund of that IGST paid in error. Since you did not claim refund, the amount remains as cash balance under IGST head.

2. Ineligible ITC Adjustment
   The ineligible ITC liability (under section 17(5)) is a tax liability that should be discharged by paying CGST, SGST, or IGST accordingly.

3. Utilization of Tax Paid in Cash

   • Cash paid towards CGST and SGST can be used only for payment of CGST and SGST liabilities respectively.

   • Similarly, cash paid towards IGST can be used for IGST liabilities and also for CGST and SGST liabilities as per priority rules.

   • But CGST cash cannot be adjusted directly against IGST or vice versa.

4. Adjusting Cash Paid CGST & SGST Against Ineligible ITC

   • If your ineligible ITC liability is under CGST/SGST, the cash paid CGST & SGST can be utilized against it.

   • If you paid CGST & SGST in cash for the rectification, you can adjust these amounts against your ineligible ITC liability in your returns.

5. Loss of Rs 10 Lakhs

   • If you neither claim refund of wrongly paid IGST nor adjust the cash paid CGST/SGST against the ineligible ITC liability, that amount will remain unused, leading to loss.

   • Therefore, you should claim refund of IGST or utilize the cash paid CGST/SGST against the liability to avoid loss.

What to Do Now?

• Check your ITC and cash ledger balances on the GST portal.

• Adjust the cash paid CGST & SGST towards your ineligible ITC liability while filing the return for the relevant period.

• If refund claim for IGST was not made, consider filing it now, if still possible.

• Consult your GST practitioner or Chartered Accountant for help in filing revised returns or refund claims if needed.