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CS Professional · Goods and Services Tax (GST) and Corporate Tax Planning · Input Tax Credit and Computation of GST Liability

Which statement about utilisation of the electronic cash ledger and electronic credit ledger is correct under section 49 of the CGST Act, 2017?

The electronic cash ledger can pay tax, interest, penalty, fees or any other amount payable under the Act or rules. The electronic credit ledger is restricted to paying output tax under the CGST or IGST Acts, so it cannot pay interest or penalty.

  1. ACredit ledger balance may be used to pay interest and penalty
  2. BCash ledger balance may be used for tax, interest, penalty, fees or any other amount payable under the Act or rulesCorrect
  3. CCash ledger balance may be used only for paying tax and not interest
  4. DCredit ledger balance may be used for paying fees and penalty

Explanation

Section 49(3) allows the cash ledger to be used for tax, interest, penalty, fees or any other amount. Section 49(4) limits the credit ledger to payment of output tax under the CGST Act or the IGST Act. So credit cannot pay interest, penalty or fees.

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