ITC utilisation

Easy Trick to Learn Manner of ITC Utilisation:

Let's see a small story first and then we will understand this topic.

I stay in my home with my wife and my mother. All three of us are employees earning a salary.

My wife does not like my mother and my mother hates my wife. They both are not in good terms.

If My mother has any excess money, she gives it to me, but she does not give to my wife.

If my wife has any excess money, she gives to me and she will never give it to my mother.

Now, if I have any excess money, first I will always give my mother and remaining money I will give it to my wife.

Now, let's relate this to the topic, 'Utilization of Input Tax Credit'.

IGST - Me
CGST - My Mother
SGST - My Wife

Excess ITC in CGST (My Mother) can be used against IGST (Me), but not SGST (My Wife).

Excess ITC in SGST (My Wife) can be used against IGST (Me), but not CGST (My Mother).

Excess ITC in IGST (Me) will be first used against CGST (My Mother), and remaining for SGST (My Wife).