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CA Intermediate · Taxation · Payment of Tax

Mehta Industries has outstanding CGST liability of Rs 60,000 and SGST liability of Rs 60,000. Its electronic credit ledger shows CGST credit Rs 80,000 and SGST credit Rs 10,000, and IGST credit Rs 0. What is the minimum amount it must pay in cash, ignoring interest?

The minimum cash payment is Rs 50,000. CGST credit cannot be used to pay SGST, so CGST liability is fully met from credit, while SGST liability of Rs 60,000 is reduced only by SGST credit of Rs 10,000, leaving Rs 50,000 to be paid in cash.

  1. ARs 50,000Correct
  2. BRs 40,000
  3. CRs 30,000
  4. DRs 70,000

Explanation

CGST credit can be used for CGST only (and IGST), not SGST. CGST liability Rs 60,000 is covered by credit, leaving Rs 20,000 CGST credit unusable against SGST. SGST liability Rs 60,000 less SGST credit Rs 10,000 leaves Rs 50,000 cash. Rs 70,000 wrongly treats the full CGST credit as unavailable... Rs 30,000 wrongly cross-uses CGST credit against SGST.

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