NEW GST INPUT SET OFF RULES.

SET OFF RULES WEF 01.02.2019.

As per CGST Amendment act 2018, the set off rules has been changed the updated rules are presented with examples as follows:

Section 49(2),5(c),5(d)

Amended proviso 5(c)

“Provided that the input tax credit on account of State tax shall be utilised towards payment of integrated tax only where the balance of the input tax credit on account of central tax is not available for payment of integrated tax;”;

Amended proviso 5(D)

in clause (d), the following proviso shall be inserted, namely:–– “Provided that the input tax credit on account of Union territory tax shall be utilised towards payment of integrated tax only where the balance of the input tax credit on account of central tax is not available for payment of integrated tax;

Let us understand with example:

IGST Liability: 15000.

CGST Input: 10,000.

SGST Input: 10,000.

Answer:

Old Rule:	New Rule:
SGST: 10,000. CGST: 5,000.	CGST Input: 10,000. SGST Input: 5,000.

New Provision Section 49A

“49A. Notwithstanding anything contained in section 49, 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 utilised fully towards such payment.

Implication of such provision:

As per author view the implication of such provision is that, we have to first utilize input tax credit of IGST, and then use CGST/SGST input tax credit for the balance liability.

Let us Understand with following Chart:

As per old law: The Following sequences are required to be maintained:

IGST LIABILITY	CGST LIABILITY	SGST LIABILITY
• IGST CREDIT • CGST OR SGST CREDIT	• CGST CREDIT • IGST CREDIT	• SGST CREDIT • IGST CREDIT

As per New Amended CGST Law: The Following sequences are required to be maintained:

IGST LIABILITY	CGST LIABILITY	SGST LIABILITY
• IGST CREDIT • CGST CREDIT • SGST CREDIT	• IGST CREDIT • CGST CREDIT	• IGST CREDIT • SGST CREDIT

After the insertion of new provision of section 49A it seems that the registered person needs to pay GST in certain situation which was not the case earlier

Let us understand with example:

old Scenario
Credit	Amount	Liability	Adjustment Ist	Adjustment Iind	Balance Pay
IGST	20	0			0
CGST	20	30	Rs 30-20 (CGST C)	Rs 10-10 (IGST C)	0
SGST	20	30	Rs 30-20 (SGST C)	Rs 10-10 (IGST C)	0
New Scenario
Credit	Amount	Liability	Adjustment Ist	Adjustment IInd	Balance Pay
IGST	20	0	0	0	0
CGST	20	30	Rs 30-20 (IGST C)	Rs 10-10 (CGST C)	0
SGST	20	30	Rs 30-20 (SGST C)		10
As per Author view, In Amended Scenario it seems that dealer required to pay tax as in previous scenario the liability of GST get adjusted towards inputs.