Tax Management India. Com
                        Law and Practice: A Digital eBook ...

Category of Documents

TMI - Tax Management India. Com
Case Laws Acts Notifications Circulars Classification Forms Manuals SMS News Articles
Highlights
D. Forum
What's New

Share:      

        Home        
 
Article Section
Home Articles Goods and Services Tax - GST Ramandeep Bhatia This
← Previous Next →

Analysis of New Rule 88A –“order of Utilization of input tax credit” along with numeric illustrative comparison pre and post amendments.

Submit New Article

Discuss this article

Analysis of New Rule 88A –“order of Utilization of input tax credit” along with numeric illustrative comparison pre and post amendments.
By: Ramandeep Bhatia
April 3, 2019
  All Articles by: Ramandeep Bhatia       View Profile
  • Contents

The new order of ITC utilization rule 88A is brought vide Notification no 16/2019 dated 29-03-2019. This may bring some relief to the business community, which has sensed an increase in there working capital requirement due to blockage of credit by the amendment made in section 49 vide first amendment act made effective from 1st FEB 2019. Let us analyze the changes that are being brought by the new order of utilization vide rule 88A by the power conferred to the government vide section 49B.

  • Rule 88A." Order of utilization of input tax credit.-

Input tax credit on account of integrated tax shall first be utilised towards payment of integrated tax, and the amount remaining, if any, may be utilised towards the payment of central tax and State tax or Union territory tax, as the case may be, in any order:

Liability

IGST

CGST

SGST/UGST

Remarks

ITC-IGST

1st

2nd

/

3rd

2nd

/

3rd

IGST liability will be settled off first compulsory and then free to use IGST Input in either of the payment CGST or SGST/UGST liability in any order.

Comments:

 As per amendment act the order of utilization after the setoff of IGST liability was compulsory CGST and then SGST/UGST.  Now the order has been relaxed wherein either of CGST or SGST/UGST liability can be set off.

Provided that the input tax credit on account of central tax, State tax or Union territory tax shall be utilised towards payment of integrated tax, central tax, State tax or Union territory tax, as the case may be, only after the input tax credit available on account of integrated tax has first been utilized fully.”

Liability

IGST

CGST

SGST/UGST

Remarks

ITC -IGST

1st

2nd

/

3rd

2nd

/

3rd

ITC of IGST to be exhausted first than the only ITC of CGST or SGST/UGST can be utilized for respective payments.

ITC- CGST

2nd

1st

X

 

ITC- SGST

2nd

X

1st

The credit of SGST/UGST will be utilized for the payment IGST only when there is no other ITC available.

  • Let’s understand the changes by the illustrative numeric example below:

Old set-off rules-prior to the

amendment in section 49

New set-off rules

(After First Amendment Act)

Latest set-off 

(After insertion of Rule 88A)

Old set-off rules

IGST

CGST

SGST

New set-off rules (After First Amendment Act)

IGST

CGST

SGST

Latest set-off  (After insertion of Rule 88A)

IGST

CGST

SGST

Output liability

500

500

500

Output liability

500

500

500

Output liability

500

500

500

Input credit (including opening)

750

350

350

Input credit (including opening)

750

350

350

Input credit (including opening)

750

350

350

                       

Priority of utilisation :

     

Priority of utilisation :

     

Priority of utilisation :

     

Intra head credit utilisation

-500

-350

-350

Inter head credit utilisation

-500

-250

0

Inter head credit utilisation

-500

-150

-100

Inter head credit utilisation

 

-150

-100

– Utilised from

 

IGST

 

– Utilised from

 

IGST

 

– Utilised from

 

IGST

IGST

Intra head credit utilisation

 

-250

-350

Intra head credit utilisation

 

-350

-350

                       

Balance Input credit

0

0

0

Balance Input credit

0

100

0

Balance Input credit

0

0

0

                       

Payable

0

0

50

Payable

0

0

150

Payable

0

0

50

Comments:

By looking at the above comparison under a different set of provision, we can clearly point out that the earlier position of setoff under earlier sec.49 (before amendment act) has been restored by the insertion of new rule 88A.

 

By: Ramandeep Bhatia - April 3, 2019

 

 

Discuss this article

 
← Previous Next →

|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || Database || Members || Refer Us ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.
|| Blog || Site Map - Recent || Site Map || ||