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CS Executive · Tax Laws and Practice · Procedural Compliance under GST

Under the CGST Act, 2017, a registered person has an amount of input tax credit on account of central tax in the electronic credit ledger. For which of the following payments can this central tax credit be utilised?

Central tax credit is first applied to central tax liability and any remaining balance may then be applied to integrated tax. It cannot be used to pay State tax or Union territory tax, because the Act expressly prohibits that cross-utilisation.

  1. APayment of State tax output liability after the central tax liability is paid
  2. BPayment of central tax and thereafter, if any balance remains, integrated taxCorrect
  3. CPayment of Union territory tax only
  4. DPayment of integrated tax only, and never towards central tax

Explanation

Section 49(5)(b) says central tax credit is first used for central tax and the remaining amount may be used for integrated tax. Section 49(5)(e) bars its use for State tax or Union territory tax. The option allowing State tax payment is therefore wrong.

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