Mandatory utilization of IGST credit for payment of any Tax:

From 1st February 2019, it would be mandatory for a supplier to utilize the credit of IGST first for payment
of output tax liability (IGST, CGST, SGST or UTGST), and the balance of other ITC (CGST, SGST or
UTGST) can be used only if balance of credit of IGST is completely exhausted.

I. Rules of Set off till The Month of January 2019 –

Payment for First set off from Then set off from
IGST IGST CGST and SGST
CGST CGST IGST
SGST SGST IGST

Example 1 (When there is no liability of IGST but there is ITC of IGST)-

ITC ITC Liability 1st 2nd Balance to Balance ITC

Amount Adjustment Adjustment pay in Cash
IGST 100 - - - - -
CGST 100 150 Rs. 150-100 Rs. 50—50 - -
(CGST) (IGST)
SGST 100 150 Rs. 150-100 Rs. 50-50 - -
(SGST) (IGST)

Example 2 (When there is some liability of IGST as well as ITC of IGST)-

ITC ITC Amount Liability 1st 2nd Balance to Balance ITC

Adjustment Adjustment pay in Cash
IGST 100 50 Rs. 50-50 - - -
(IGST)
CGST 100 150 Rs. 150-100 Rs. 50-50 - -
(CGST) (IGST)
SGST 100 150 Rs. 150-100 - 50 -
(SGST)

II. Rules of Set off from the Month of February 2019 –

Payment for First set off from Then set off from
IGST IGST CGST and SGST
CGST IGST CGST
SGST IGST SGST
Example 1 (When there is no liability of IGST but there is ITC of IGST)-

ITC ITC Liability 1st 2nd Balance to Balance ITC

Amount Adjustment Adjustment pay in Cash
IGST 100 - - - - -
CGST 100 150 Rs. 150-100 Rs. 50—50 - 50
(IGST) (CGST)
SGST 100 150 Rs. 150-100 - 50 -
(SGST)

Example 2 (When there is some liability of IGST as well as ITC of IGST)-

ITC ITC Amount Liability 1st 2nd Balance to Balance ITC

Adjustment Adjustment pay in Cash
IGST 100 50 Rs. 50-50 - - -
(IGST)
CGST 100 150 Rs. 150-50 Rs. 100-100 - -
(IGST) (CGST)
SGST 100 150 Rs. 150-100 - 50 -
(SGST)

Comparison of Manner and Utilization of Input Tax Credit:

Upto 31st January 2019 From 1st February 2019-N.N.02/2019-Central Tax

ITC Utilization to be done as follows:
IGST liability- First ITC of IGST,
then ITC of CGST,
then ITC of SGST
CGST liability- First ITC of CGST,
then ITC of IGST.
SGST liability- First ITC of SGST,
then ITC of IGST
First ITC of IGST is to be used for all types of outward liability before other ITC can be used.
New section 49A introduced:
ITC Utilization to be done as follows:
IGST liability- First ITC of IGST,
then ITC of CGST,
then ITC of SGST
CGST liability- First ITC of IGST,
then ITC of CGST
SGST liability – First ITC of IGST,
then ITC of SGST