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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 the due date of payment: electronic cash ledger Rs 40,000; electronic credit ledger: IGST Rs 30,000, CGST Rs 10,000, SGST Rs 5,000. Its output liability for the month is IGST Rs 20,000, CGST Rs 15,000 and SGST Rs 15,000. Applying the order of utilisation of input tax credit under the CGST Act, what is the minimum amount Sundaram must pay through the electronic cash ledger?

The minimum cash payment is Rs 10,000. IGST credit first discharges IGST and then CGST, CGST credit discharges CGST, and SGST credit discharges SGST. CGST credit cannot be used against SGST, so the remaining SGST liability of Rs 10,000 after SGST credit must be paid in cash.

  1. ARs 10,000Correct
  2. BRs 15,000
  3. CRs 20,000
  4. DRs 25,000

Explanation

IGST credit Rs 30,000 is first used for IGST liability Rs 20,000, leaving Rs 10,000. The balance is then applied to CGST first (Rs 10,000 against Rs 15,000), leaving CGST Rs 5,000 and SGST Rs 15,000. CGST credit Rs 10,000 is used for the remaining CGST Rs 5,000, leaving Rs 5,000 of CGST credit, which cannot be used against SGST. SGST credit Rs 5,000 reduces SGST to Rs 10,000. Hmm, recompute: IGST credit Rs 10,000 left goes to CGST Rs 10,000 (CGST left Rs 5,000). Then CGST credit Rs 10,000 clears CGST Rs 5,000. SGST Rs 15,000 less SGST credit Rs 5,000 = Rs 10,000 cash. CGST credit left Rs 5,000 cannot be used for SGST, so cash is Rs 10,000. Option Rs 25,000 wrongly ignores the IGST credit.

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