Businesses can use IGST credit to settle centre, state tax dues: CBIC !
Businesses that have accumulated Integrated GST (IGST) credit in their books can settle it against central and state tax dues in any proportion, the revenue department has said. Importers typically pay IGST on goods they bring into the country. Also IGST is paid on inter-state movement of goods. This tax is supposed to be set-off against the actual GST paid, or may be claimed as refund in certain cases.
The Central Board of Indirect Taxes and Customs (CBIC) in March had allowed utilisation of input tax credit (ITC) of IGST towards the payment of Central GST and State GST, in any order subject to the condition that the entire IGST liability has been first discharged using the accumulated credit.
However, there were confusion among taxpayers regarding the quantum of utilisation of IGST credit in paying CGST and SGST dues.
The CBIC has now clarified that the IGST credit can be used in payment of CGST or SGST in any order or proportion.
Under Goods and Services Tax (GST), the tax levied on consumption of goods or rendering of service is split 50:50 between the centre (CGST) and the state (SGST).
On inter-state movement of goods as well as imports, an IGST is levied, which accrues to the centre.
Ideally, there should be 'nil' balance in the IGST pool at the end of a fiscal since the amount should be used for payment of CGST and SGST.
As some businesses are ineligible to claim the benefits of input tax credit (ITC), the balance gets accumulated in the IGST pool.
SOURCE- THE ECONOMIC TIMES