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CMA Final · Indirect Tax Laws and Practice · Walkthrough of GSTN Portal

Mehta Industries has IGST credit of Rs 40,000, CGST credit of Rs 30,000 and SGST credit of Rs 10,000 in its electronic credit ledger. For the month it has output liability of CGST Rs 50,000, SGST Rs 20,000 and IGST Rs 25,000. Applying the order of utilisation of ITC, what cash must it pay for the three taxes together, assuming the IGST credit is used optimally?

Total liability is Rs 95,000 against total credit of Rs 80,000, and since all credit can be fully absorbed by the three liabilities with IGST used across CGST and SGST, the cash payable is Rs 15,000.

  1. ARs 0
  2. BRs 5,000Correct
  3. CRs 10,000
  4. DRs 15,000

Explanation

Total liability = 50,000+20,000+25,000 = 95,000. Credit available = 80,000. IGST credit first pays IGST 25,000, leaving 15,000. CGST: 30,000 credit plus 15,000 IGST = 45,000 against 50,000, shortfall 5,000. SGST liability 20,000 against SGST credit 10,000 is short by 10,000, and the remaining IGST is already used. Using IGST 15,000 on SGST instead leaves CGST short by 20,000. Total cash = 95,000-80,000 = 15,000 whichever way, so the option of 15,000 is the count with no restriction. Check: credits are fully used only if cross-use fits; CGST credit cannot pay SGST, so with IGST 15,000 split as 5,000 to CGST and 10,000 to SGST, cash is 0 for CGST and SGST. Hence cash = 0 for CGST 50,000 (30,000+5,000... ) wait, 30,000+5,000=35,000 leaves 15,000 short. Cash needed is therefore 15,000 in total.

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