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CA Intermediate · Taxation · Payment of Tax

Sundaram Traders, a registered person in Chennai, has the following balances in its electronic ledgers on 20 June: electronic cash ledger Rs 40,000; electronic credit ledger: IGST Rs 50,000, CGST Rs 10,000, SGST Rs 30,000. Its output liability for the month is IGST Rs 20,000, CGST Rs 35,000 and SGST Rs 15,000. Using the credit ledger in the order prescribed by law, what is the balance of CGST to be paid in cash after utilising credit?

The CGST cash payable is nil. IGST credit first pays IGST liability of Rs 20,000, and the remaining Rs 30,000 goes to CGST. The balance CGST of Rs 5,000 is then cleared using the available CGST credit of Rs 10,000, so no cash is needed.

  1. ARs 0Correct
  2. BRs 5,000
  3. CRs 15,000
  4. DRs 25,000

Explanation

IGST credit is used first for IGST liability: Rs 20,000 is set off, leaving Rs 30,000 IGST credit. The balance IGST credit is then applied to CGST liability: Rs 30,000 against Rs 35,000, leaving Rs 5,000 CGST. The CGST credit of Rs 10,000 then clears the remaining Rs 5,000, so cash payable is nil. Option Rs 5,000 wrongly ignores the CGST credit balance.

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