EXAMPLE-103

Kumar & Sons, a manufacturer firm, is engaged in manufacturing of final product (taxable) and purchased following items during the month of April.

(a)             Intra –state purchase of input goods of Rs 200000, CGST paid Rs 10000 and SGST Paid of Rs 10000.

(b)            Interstate supply of input services of Rs 300000. IGST paid on this Rs.45000.

Sale during April month

 (i)              Interstate sale of Rs 200000 and IGST liability is of Rs 30000.

(ii)            Intrastate sale of Rs 150000 and liability of CGST Rs. 15000 and SGST Rs 15000.

Compute how input tax credit utilized for output tax liability.

Answer.

AS per section 49(5), the amount of input tax credit available in the electronic credit ledger of the registered person on account of––

(a) integrated tax shall first be utilised towards payment of integrated tax and the amount remaining, if any, may be utilised towards the payment of Central tax and State tax, or as the case may be, Union territory tax, in that order;

(b) the Central tax shall first be utilised towards payment of Central tax and the amount remaining, if any, may be utilised towards the payment of Integrated tax;

(c) the State tax shall first be utilised towards payment of State tax and the amount remaining, if any, may be utilised towards payment of Integrated tax;

(d) the Union Territory tax shall first be utilised towards payment of Union Territory tax and the amount remaining, if any, may be utilised towards payment of Integrated tax;

(e) the Central tax shall not be utilised towards payment of State tax or Union Territory tax; and

(f) the State tax or Union territory tax shall not be utilised towards payment of Central tax.  

ITC is available subject to fulfillment of  condition of section 16.

In view of above provision the input tax will be utilized in the following manner:-