Question 3 (b)
Order of using SGST input tax credit
6 marks
- Time to write
- About 12 minutes
- Notes
- Crux notes
Question
Question 3 (b) · 6 marksM/s Pramod Enterprise has ₹72,000 in the electric credit ledger on account of an input tax credit of SGST. As per the electronic liability register, the output GST payable is as follows:
| GST Payable/Output GST | ₹ |
|---|---|
| Outward IGST | 36,000 |
| Outward CGST | 84,000 |
| Outward SGST | 30,000 |
Determine in what order the ITC on account of SGST is utilized, and prepare a statement that shows the amount due, adjusted, and payable.
Reworded from the university paper: names and figures differ, the task is the same. The original paper belongs to the University of Delhi. See DU's question bank.
Before you write
Read off the question and its marks
Read from the question
- prepare a statementDraw the format first (heading, columns, dates), then fill in the figures from your working.
- DetermineFormula first, then the working, then the answer with its unit (₹, %, units).
What the paper leaves open
"Electric credit ledger" is read as the electronic credit ledger.
Write it in this order
- Read the data; tick every adjustment as you plan it 1 min
- 1 Order of utilisation of SGST credit 2 marks 3 min
- 2 Statement of amount due, adjusted and payable 3 marks 5 min
- 3 Credit carried forward 1 mark 2 min
- Check: every adjustment used, both sides agree, dates in 1 min
Short on time? Step 2 carries 3 of the 6 marks: guard its minutes.
Try it first. About 12 minutes for 6 marks. Write it out, then open the solution.
Solution
Hover or tap a marked figure, like 72,000, to see how it is made and where else it appears.
Order of utilisation of SGST credit. Section 49(5) of the CGST Act sets the order. Input tax credit of SGST (State tax) is used:
- first, to pay output SGST (section 49(5)(c));
- then, any balance to pay output IGST (section 49(5)(c)). Under the proviso to clause (c), SGST credit pays IGST only where no CGST credit is available for it; the ledger here holds SGST credit only, so the proviso does not stop it;
- it can never be used to pay output CGST (section 49(5)(f): State tax credit shall not be used towards central tax).
Rule 88A of the CGST Rules requires IGST credit to be used up first, before CGST or SGST credit is used. The electronic credit ledger here holds no IGST credit, so the rule does not change the order. The rest of the SGST credit is carried forward in the electronic credit ledger, and any output tax not covered by credit is paid in cash.
Statement of amount due, adjusted and payable
| Output GST | Amount due ₹ | Adjusted against SGST credit ₹ | Payable in cash ₹ |
|---|---|---|---|
| IGST | 36,000 | 36,000 | 0 |
| CGST | 84,000 | 0 | 84,000 |
| SGST | 30,000 | 30,000 | 0 |
| Total | 1,50,000 | 66,000 | 84,000 |
SGST credit available 72,000 − used (30,000 against SGST + 36,000 against IGST) 66,000 = ₹6,000 carried forward. CGST of ₹84,000 is payable in cash, since SGST credit cannot be set off against it.
Where the 6 marks sit
| # | Component | Marks |
|---|---|---|
| 1 | Order of utilisation of SGST credit | 2 |
| 2 | Statement of amount due, adjusted and payable | 3 |
| 3 | Credit carried forward | 1 |
| Total | 6 |
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