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CMA Final · Indirect Tax Laws and Practice · Input Tax Credit

An ISD located in Maharashtra has CGST credit of Rs 30,000 and SGST credit of Rs 30,000 on an input service attributable to a recipient unit in Gujarat, which shares the ISD's PAN. All of the credit is eligible. How is the credit distributed to the Gujarat unit?

The Gujarat unit receives Rs 60,000 as integrated tax. For a recipient located in a different State from the ISD, central and State tax credit is distributed as IGST equal to the aggregate of both amounts. Distribution as CGST and SGST applies only to recipients in the ISD's own State.

  1. ACGST Rs 30,000 and SGST Rs 30,000
  2. BIGST Rs 60,000Correct
  3. CIGST Rs 30,000 only, with the SGST portion lapsing
  4. DCGST Rs 30,000 and IGST Rs 30,000

Explanation

For a recipient in a State other than that of the ISD, credit of central tax and State tax is distributed as integrated tax. The amount equals the aggregate of the central and State tax credit qualifying for that recipient, i.e. 30,000 + 30,000 = Rs 60,000. The option showing CGST and SGST would apply only to a recipient in the same State as the ISD.

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