GST Electronic Credit Ledger (Section 49 GST Act)

GST Electronic Credit Ledger (Section 49 GST Act) : Sub-section (2) of section 49 of the CGST Act provides that the selfassessed input GST credit (ITC) by a registered person shall be credited to its Electronic Credit Ledger or  lectronic Input GST Credit Ledger. This is to be maintained in the prescribed form. In our earlier article, we have already provided detailed explanation on GST Electronic Cash Ledger and also the much talked about GST Electronic Services Handbook.

Manner of utilisation of ITC

The electronic credit ledger can be debited only to the extent of the discharge of any liability in accordance with section 49.

  • The input GST credit available under the head IGST in the electronic credit ledger will first be utilized against IGST payment.
    • Remaining amount if any, will be utilized in the following manner:-
      1. as against CGST payment
      2. if any amount is remaining after adjustment against CGST payment, it can be utilized to make SGST/UTGST payment.
  • Available CGST Credit in the credit ledger shall first be utilized for payment of CGST.
    • Remaining amount if any, will be utilized for payment of IGST
  • Available SGST /UTGST credit in the credit ledger shall first be utilized for payment of SGST/UTGST.
    • Remaining amount if any, will be utilized for payment of IGST

Transfer of input GST credit 

Section 53 of CGST Act provides simple but important modus operandi in respect of post CGST utilisation towards IGST liability. Under section 49(5)(b),(c) and (d) of the Act, CGST/SGST/UTGST credits can be utilised by a GST payer on priority basis to respective CGST/SGST/UTGST dues first. Then, in case of CGST, balance, if any, can be used to pay towards IGST.

If used so, there shall be reduction in central GST caused by Central Government and equal credit shall be ensured to IGST in the prescribed manner. In other words, if CGST is utilised to pay towards dues of IGST, there shall be reduction in CGST on such utilisation and the Central Government shall transfer equivalent amount to the credit of IGST account.

GST Electronic Credit Ledger Section 49 GST Act

Thus, in this manner the Central Government shall ensure due credit to IGST. Such treatment shall be ensured by the Central Government for UTGST and SGST also in respective cases. It may be noted that equivalent provision is there in Section 18 of IGST Act, 2017.

What happens if the GSTable person files the return but does not make payment of GST? 

In such cases, the return is not considered as a valid return. Section 2(117) defines a valid return to mean a return furnished under sub-section (1) of section 39 on which self-assessed GST has been paid in full.

It is only the valid return that would be used for allowing input GST credit (ITC) to the recipient. In other words, unless the supplier has paid the entire self-assessed GST and filed his return and the recipient has filed his return, the ITC of the recipient would not be confirmed.

Conclusion : GST Electronic Credit Ledger

We have tried to explain everything related to the GST Electronic Credit Ledger in this article. Even though proper care has been taken to make sure that there will not be any errors on this editorial on GST Electronic Credit Ledger, there are chances of minor mistakes.

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