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CA Intermediate · Taxation · Payment of Tax

Anita Foods, a registered person in Pune, has an output CGST liability of Rs 90,000 and SGST liability of Rs 90,000 for a month. The electronic credit ledger shows CGST Rs 50,000, SGST Rs 70,000 and IGST Rs 60,000. The registered person wants to minimise cash payment. What is the cash payable?

Cash payable is nil. IGST credit can be applied to CGST and SGST in any order after IGST liability, so Rs 40,000 of it clears the CGST shortfall and Rs 20,000 the SGST shortfall. Total credit of Rs 1,80,000 equals total liability, leaving nothing payable in cash.

  1. ARs 0Correct
  2. BRs 20,000
  3. CRs 40,000
  4. DRs 50,000

Explanation

Use IGST credit first: Rs 60,000 against CGST Rs 90,000 leaves CGST Rs 30,000; then CGST credit Rs 50,000 clears it, leaving Rs 20,000 CGST credit. Alternatively split the IGST: Rs 20,000 against SGST... Total liability is Rs 1,80,000 and total credit is Rs 1,80,000. Use IGST Rs 20,000 for SGST (leaving SGST Rs 70,000, cleared by SGST credit Rs 70,000) and IGST Rs 40,000 for CGST (leaving Rs 50,000, cleared by CGST credit Rs 50,000). Cash is nil. The rule is that IGST credit is used for IGST first and then CGST and SGST in any order.

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