GST Return Filing - File GSTR-3B

How to pay GST and claim Input Tax Credit (ITC) for each month under GST – Know everything about ITC of CGST, SGST and IGST

By Paras Mehra

( 4.52K Views) August 11, 2017

1.0 Introduction

As per the recent report of the GSTN, it has been found that more than 70% taxpayers are not ready to be GST compliant which is a worrying figure since we are already reaching the return filing deadline. Therefore, in order to decode this complex GST procedure, we have come up with this article, in order to help you understand how you shall be doing monthly compliances under GST correctly.

Most importantly, how you are utilizing your ITC and paying taxes. Let us first understand the rules of utilization for ITC with example and then we can move to analyze different cases.

2.0 Rules of ITC for utilization – Order of utilization of ITC i.e. CGST SGST and IGST.

The order of utilization of Input tax Credit (ITC) is to be followed strictly. The order of ITC utilization is as follows:

Input Tax Credit	1^st Utilization	2^nd Utilization	3^rd Utilization
IGST	IGST	CGST	SGST
CGST	CGST	IGST	NA
SGST	SGST	IGST	NA

The most important point to understand above is that the ITC of CGST cannot be utilized against SGST and the vice versa.

Let us now understand the above order by way of example.

2.1 How to utilize the ITC of IGST with example

Example: Suppose we have the ITC of IGST of Rs.100,000/- and we need to pay the tax on sales as follows:

IGST of Rs.30,000/-
CGST of Rs.40,000/-
SGST of Rs.40,000/-

Elaborate how ITC can be utilized?

Answer: The GST calculation is as under:

Particulars	IGST	CGST	SGST
Total tax liability	30,000	40,000	40,000
Less: ITC of IGST	(100,000)	(70,000)	(30,000)
Net to be Paid/(ITC)	(70,000)	(30,000)	10,000

Net Summary: The net ITC available is zero and the net SGST needs to be paid is Rs.10,000/-.

2.2 How to utilize the ITC of CGST with example

Example: Suppose we have the ITC of CGST of Rs.100,000/- and we need to pay the tax on sales as follows:

IGST of Rs.30,000/-
CGST of Rs.40,000/-
SGST of Rs.40,000/-

Elaborate how ITC can be utilized?

Answer: The GST calculation is as under

Particulars	CGST	IGST	SGST
Total tax liability	40,000	30,000	40,000
Less: ITC of CGST	(100,000)	(60,000)	-
Net to be Paid/(ITC)	(60,000)	(30,000)	40,000

Net Summary: The net ITC available of CGST to be carried forward is Rs.30,000 and the net SGST needs to be paid is Rs.40,000/-.

2.3 How to utilize the ITC of SGST with example

Example: Suppose we have the ITC of SGST of Rs.100,000/- and we need to pay the tax on sales as follows:

IGST of Rs.30,000/-
CGST of Rs.40,000/-
SGST of Rs.40,000/-

Elaborate how ITC can be utilized?

Answer: The GST calculation is as under

Particulars	SGST	IGST	CGST
Total tax liability	40,000	30,000	40,000
Less: ITC of CGST	(100,000)	(60,000)	-
Net to be Paid/(ITC)	(60,000)	(30,000)	40,000

Net Summary: The net ITC available of SGST to be carried forward is Rs.30,000 and the net CGST needs to be paid is Rs.40,000/-.

2.4 A Comprehensive example

Example: Suppose we have the ITC of CGST, SGST and IGST as follows:

ITC of IGST = Rs.50,000
ITC of CGST = Rs.35,000
ITC of SGST = Rs.15,000

and we need to pay the tax on sales as follows:

IGST of Rs.40,000/-
CGST of Rs.45,000/-
SGST of Rs.27,000/-

Elaborate how ITC can be utilized?

Answer: The GST calculation is as under

Particulars	IGST	CGST	SGST
Total tax liability	40,000	45,000	27,000
Less: ITC of CGST
1^st Order	(50,000)	(35,000)	(15,000)
Tax payable/(ITC Balance)	(10,000)	10,000	8,000
2^nd Order	-	(10,000)	-
Net to be Paid/(ITC)	-	-	8,000

Net Summary: The net ITC available is zero and the net SGST needs to be paid is Rs.8,000/-.

3.0 Conclusion

Hence, we have now explained to you the different cases and the complete working on how the ITC under GST works. However, if in case you have any problem, please write to us at info@hubco.in.

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