Utilization of ITC | ITC Reconciliation, GSTR 2A Reconciliation - Digitax Automation https://www.digitaxindia.com Wed, 18 Mar 2020 05:24:09 +0000 en-US hourly 1 https://wordpress.org/?v=6.9.1 https://www.digitaxindia.com/wp-content/uploads/2022/02/favicon.ico Utilization of ITC | ITC Reconciliation, GSTR 2A Reconciliation - Digitax Automation https://www.digitaxindia.com 32 32 Key Outcomes – 3rd National GST Conference https://www.digitaxindia.com/key-outcomes-3rd-national-gst-conference/?utm_source=rss&utm_medium=rss&utm_campaign=key-outcomes-3rd-national-gst-conference Thu, 12 Mar 2020 10:41:22 +0000 https://www.digitaxindia.com/?p=2267

On March 6, 2020, the 3rd National GST Conference of Commissioners of State Tax and Zonal Chief Commissioners of Central Tax was held at Vigyan Bhavan, New Delhi under the chairmanship of Union Finance Secretary, Dr Ajay Bhushan Pandey. Hon’ble Union Finance Minister, Smt. Nirmala Sitharaman also joined the Conference and intensively discussed the status of GST Portal to address grievances of taxpayers.

The conference deliberated various measures for streamlining the GST return filing process, enhancing revenue and focused compliance management as well as to create synergy among Central and State tax administrations.

States, namely Rajasthan, West Bengal, Odisha, Gujarat and Punjab made presentations on best practices followed by them in compliance management and revenue augmentation in their tax administration. Further, they informed the participants about various modus operandi detected by them in the State and various measures taken by them to curb tax evasion. Pr. DG, DGGI also presented a presentation in the conference on tax evasion and enforcement measures followed by them.

GST Policy Wing, CBIC presented different measures in the pipeline for increased compliance management and revenue augmentation as well as on Consumer Incentivization Scheme for promoting behaviour of seeking invoices.

Later, Infosys presented the status on business statistics, a trend of filing return, the preparedness of the system vis-à-vis the facilities required to be launched and measures need to be taken to address GST Portal’s capacity and to resolve difficulties being faced by taxpayers. It was constantly stressed in the conference that ownership for delivery and satisfactory performance of GST Portal lies specifically upon the Infosys and they should meet to the expectation. The grievances of taxpayers are the utmost priority and Infosys is liable to resolve them. CEO, GSTN also presented system issues and initiatives by GSTN for further strengthening and streamlining GST.

The conference was attended by the Chief Commissioners of Central Tax Zones, Commissioners of State Taxes, Directors General of Revenue Intelligence, GST Intelligence, Analytics and Risk Management, Audit, System and Data Management, Taxpayer Services, NACIN, Chairman & Members of CBIC, Senior officers of the CBIC, Senior officers of Department of Revenue, a team of GSTN, the technical team of Infosys and officers from the GST Council Secretariat.

As an outcome of in-depth deliberation, below mentioned measures were proposed for further examination –

i. Immediate steps to curb passing on Input Tax Credit (ITC) by new taxpayers

ii. Measures to check export valuation including capping of value for calculating export benefits/incentives

iii. Standard Operating Procedure (SoP) for physical spot verification of risky taxpayers

iv. Standard Operating Procedure (SoP) for blocking and unblocking of ITC

For further info about the meeting and conference, check out:

Download Press Release

Stay tuned to Digitax Automation to read about the latest GST updates.

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]]> Method of Utilization of Input Tax Credit (ITC) in GST https://www.digitaxindia.com/method-of-utilization-of-input-tax-credit-itc-in-gst/?utm_source=rss&utm_medium=rss&utm_campaign=method-of-utilization-of-input-tax-credit-itc-in-gst https://www.digitaxindia.com/method-of-utilization-of-input-tax-credit-itc-in-gst/#respond Sun, 21 Apr 2019 08:23:15 +0000 https://www.digitaxindia.com/?p=201 WHAT IS INPUT TAX CREDIT (ITC) IN GST? Goods and Services Tax (GST) is considered the biggest financial reforms in India. Input Tax Credit in brief, ITC under GST is a credit which is available to supplier to set off the tax he has paid on purchase of goods from output tax on sale of […]

The post Method of Utilization of Input Tax Credit (ITC) in GST first appeared on ITC Reconciliation, GSTR 2A Reconciliation - Digitax Automation.

]]> WHAT IS INPUT TAX CREDIT (ITC) IN GST?

Goods and Services Tax (GST) is considered the biggest financial reforms in India. Input Tax Credit in brief, ITC under GST is a credit which is available to supplier to set off the tax he has paid on purchase of goods from output tax on sale of such goods. Hence, the tax will levy on the value added which results in avoiding double taxation. In simple words, Input Credit means at the time of paying tax on sales, you can reduce the tax you have already paid on purchases.

MANNER OF UTILIZING INPUT TAX CREDIT

Most importantly, the manner of utilization of ITC for payment of Output Tax Liability in GST has been a subject matter of change since last few months. The following is the brief summary of legal provisions relating to manner of utilization of ITC.

The mechanism of utilization of GST ITC  From 01-07-2017 to 31-01-2019 (Section 49A of CGST Act) was as follows-

Nature of Liability 1st Step Utilization 2nd Step Utilization 3rd Step Utilization
IGST Output IGST Input CGST Input SGST Input
CGST Output CGST Input IGST Input –
SGST Output SGST Input IGST Input –

NEW RULES FOR UTILIZATION OF ITC IN GST

From 01-02-2019 to 31-03-2019 (Amended Section 49A of CGST Act)   From 01-02-2019 the new rules for utilization of ITC are as follows.

Nature of Liability 1st Step Utilization 2nd Step Utilization 3rd Step Utilization
IGST Output IGST Input* CGST Input SGST Input
CGST Output Any Remaining  IGST Input to be fully utilized for CGST Output * CGST Input –
SGST Output Any Remaining IGST input to be fully utilized for SGST Output* SGST Input –

*The IGST input needs to be exhausted first in order of IGST Output, CGST Output and SGST output.   From 01-04-2019 Onwards (Rule 88A of CGST Rules)   Now w.e.f. 01-04-2019, again some changes are done in the rules relating to utilization of ITC which are as below.

Nature of Liability 1st Step Utilization 2nd Step Utilization 3rd Step Utilization
IGST Output IGST Input* CGST Input SGST Input
CGST Output Any Remaining  IGST Input to be utilized for CGST Output * CGST Input –
SGST Output Any Remaining IGST input to be  utilized for SGST Output* SGST Input –

*The IGST input needs to be exhausted first for IGST Output then in any order for CGST Output and SGST output.   The above rules can be understood with following example. We are summarizing the effect of changes in rules in all the 3 cases above.

EFFECT OF CHANGES IN RULES

Output Liability ITC Available for utilization
CGST 1,000/- CGST 100/-
SGST 1,000/- SGST 100/-
IGST 200/- IGST 1,500/-

From 01-07-2017 to 31-01-2019 (Section 49A of CGST Act)

Particulars IGST CGST SGST
Output Liability 200.00 1,000.00 1,000.00
CGST Utilized 0.00 100.00 0.00
SGST Utilized 0.00 0.00 100.00
IGST Utilized 200.00 900.00 400.00
Cash Payment 0.00 0.00 500.00
ITC Balance Available 0.00 0.00 0.00

From 01-02-2019 to 31-03-2019 (Amended Section 49A of CGST Act)

Particulars IGST CGST SGST
Output Liability 200.00 1,000.00 1,000.00
IGST Utilized 200.00 1000.00 300.00
CGST Utilized 0.00 0.00 0.00
SGST Utilized 0.00 0.00 100.00
Cash Payment 0.00 0.00 600.00
ITC Balance Available 0.00 100.00 0.00

From 01-04-2019 Onwards (Rule 88A of CGST Rules)

Particulars IGST CGST SGST
Output Liability 200.00 1,000.00 1,000.00
IGST Utilized (Option Given to utilize in any manner) 200.00 900.00 400.00
CGST Utilized 0.00 100.00 0.00
SGST Utilized 0.00 0.00 100.00
Cash Payment 0.00 0.00 500.00
ITC Balance Available 0.00 0.00 0.00

Thus, rule 88A now relieves the taxpayers from the hardships of new ITC utilization mechanism effective from 01-02-2019.

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