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CS Executive · Tax Laws and Practice · Input Tax Credit and Computation of GST Liability

A registered person uses ITC availed under the CGST Act to pay IGST dues in a valid return under section 39(1). What follows under Section 53 of the CGST Act, 2017?

When CGST-account ITC is used to pay IGST, the central tax collected stands reduced by that amount and the Central Government transfers an equal sum from the central tax account to the integrated tax account, in the prescribed manner and time.

  1. AThe central tax collected is reduced by the credit utilised, and the Centre transfers an equal amount from the central tax account to the integrated tax accountCorrect
  2. BThe integrated tax collected is reduced and the amount is transferred to the State account
  3. CNo transfer takes place because ITC is only a book entry
  4. DThe registered person must pay the equal amount in cash to the integrated tax account

Explanation

Section 53 states that on such utilisation the central tax collected stands reduced by the credit utilised, and the Central Government transfers an equal amount from the central tax account to the integrated tax account. A cash payment is not required.

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