How to Optimise Credits under the New ITC Set-Off Rules | section 49A CGST | Circular No: 98/17/2019

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The New Law on Order of ITC Set-Off

The government inserted two sections 49A, 49B in the CGST Act. Also, the rule 88A has been inserted via CT notification no. 16/2019.

The circular No: 98/17/2019 dated 23 April 2019 summarised the newly inserted sections and rule and clarified the below points:

1. It is mandatory to utilise entire ITC of IGST which is available in electronic credit ledger before utilising the ITC of CGST, SGST or UTGST.

2. ITC of IGST should be utilised towards the IGST output. If any ITC of IGST remains, it can be utilised to set-off the CGST, SGST or UTGST output in any proportion and any order.

How does ClearTax help in ITC Optimisation?

ClearTax GST software is equipped for optimum ITC utilisation. With ClearTax, know the exact amount of ITC to be utilised under each of the tax head -CGST, SGST and UTGST.

ClearTax automatically computes the tax payable during the month or quarter by first considering ITC of IGST before moving onto CGST, SGST or UTGST. Balance ITC available under CGST, SGST or UTGST shall be allocated optimally to help you get maximum benefit. It ultimately keeps your cash outflow minimum possible.