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Which one of the following is NOT true regarding input tax credit to avoid cascading effect?

Which one of the following is NOT true regarding input tax credit to avoid cascading effect? Correct Answer Input Tax credit of SGST/UTGST can be utilised for payment of CGST

The correct answer is Input Tax credit of SGST/UTGST can be utilised for payment of CGST.

Key Points

  • - Products utilised or intended to be used in the course or furtherance of business and whose worth is capitalised in the books of accounts of the person claiming the input tax credit.

Important PointsUtilize IGST credit in the following order:-

First, use it to pay for IGST Utilize a second time to pay CGST, SGST, or UTGST The last to be used for SGST or UTGST or CGST payment Note: Before ITC of CGST, SGST, or UTGST may be used to satisfy any tax debt, IGST credit must be fully utilised.

Beginning on or after January 4, 2019, CGST credit should be used in the sequence of: -

Utilize IGST first, if it is available, to pay CGST, SGST, or UTGST. Use CGST to pay for CGST. Pay any remaining CGST liability in cash or by other acceptable means. Utilize any remaining CGST input credit toward paying IGST; not permitted against SGST or UTGST.

1-4-2019 Onwards , SGST or UTGST must be used in the following order:

First, use IGST, if available, to pay for SGST, UTGST, or CGST liability. •Second, use SGST or UTGST to pay for SGST, UTGST, or both. •Any remaining SGST or UTGST due must be paid in cash. Alternately, you can: •Utilize any remaining SGST or UTGST input credit toward paying the IGST •Not permitted against CGST.

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