Question ID : 44471

ITC SET OFF FOLLOWED BY GST PORTAL

Dear Sir, our client is engaged in renting of properties and also engaged in construction of apartments. we have IGST credit of Construction Business and And CGST & SGST liability for Rental Business. client wants to pay CGST & SGST Tax on cash basis without using IGST credit relating to apartment construction. reason for the same is that if IGST credit is used there will be no balance to reverse IGST credit pertaining to unsold inventory in apartment. However Portal does not allow to make payment of CGST & SGST tax in cash unless IGST credit is Exhausted . kindly guide us with the issue.

In connection to this issue the CBIC has issue a Circular No. 192/04/2023-GST. The extract of the important para of the circular is as follows; Since the amount of input tax credit available in electronic credit ledger, under any of the heads of IGST, CGST or SGST, can be utilized for payment of liability of IGST, it is the total input tax credit available in electronic credit ledger, under the heads of IGST, CGST and SGST taken together, that has to be considered for calculation of interest under rule 88B of CGST Rules and for determining as to whether the balance in the electronic credit ledger has fallen below the amount of wrongly availed input tax credit of IGST, and to what extent the balance in electronic credit ledger has fallen below the said amount of wrongly availed credit. Thus, in the cases where IGST credit has been wrongly availed and subsequently reversed on a certain date, there will not be any interest liability under sub-section (3) of section 50 of CGST Act if, during the time period starting from such availment and up to such reversal, the balance of input tax credit (ITC) in the electronic credit ledger, under the heads of IGST, CGST and SGST taken together, has never fallen below the amount of such wrongly availed ITC, even if available balance of IGST credit in electronic credit ledger individually falls below the amount of such wrongly availed IGST credit. However, when the balance of ITC, under the heads of IGST, CGST and SGST of electronic credit ledger taken together, falls below such wrongly availed amount of IGST credit, then it will amount to the utilization of such wrongly availed IGST credit and the extent of utilization will be the extent to which the total balance in electronic credit ledger under heads of IGST, CGST and SGST taken together falls below such amount of wrongly availed IGST credit, and will attract interest as per sub-section (3) of section 50 of CGST Act, read with section 20 of Integrated Goods and Services Tax Act, 2017 and sub-rule (3) of rule 88B of CGST Rules.