GST –Seamless flow of input tax credit

 First state to approve the GST bill – Assam (2nd Bihar)

 16th state to approve GST bill- Odisha (Approval of 16 states

(50% of state) is required for implementing GST)

 First state to pass the State GST bill- Telangana (9th April 2017)

 Kerala passed the state GST bill- 21st June 2017

 GST Bhavan in Kerala is situated at – Thiruvanthapuram

 New indirect tax network of the Central Board of Excise and

Customs (CBEC) for the implementation of GST- Project

Saksham

 The Government of India has launched a GST training programme

to training to youths will be provided under the Pradhan Mantri

Kaushal Vikas Yojana (PMKVY)

 Mobile application by Income tax department- Aaykar Setu

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 GST –Seamless flow of input tax credit

Features of GST

 GST is a value added tax levied on supply

 Continuous chain of tax credits
 Burden borne by final consumer
 No cascading of tax

Particulars Manufacturer Distributor Retailer Consumer

Cost 80,000 100,000 120,000 136,500
Profit 20,000 20,000 10,000
Sales Price 100,000 120,000 130,000
Output tax - GST @
5% 5,000 6,000 6,500
Total transaction
Value 105,000 126,000 136,500 .
Input tax credit Nil 5,000 6,000 Nil
Paid to
Government 5,000 1,000 500
Value Addition (A) 100,000 20,000 10,000 130,000
GST @ 5%
(A*5%) 5,000 1,000 500 6,500

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 GST –Seamless flow of input tax credit

Intra State Supply

A, B & C – Kerala.
Tax rate 18%

Particular A to B B to C
Transaction Value 10,000 12,000*
CGST @ 9% 900 1080
SGST @ 9% 900 1080
Total Tax 1800 2160
Total Price 11,800 14,160
Input tax credit available
CGST - 900
SGST - 900
Amount Paid to
Government A B Total
CGST 900 180** 1080
SGST 900 180** 1080

* 20% Value Addition

** Input tax credit Available 900. So Net tax liability 1080-900= 180

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 GST –Seamless flow of input tax credit

Inter State Supply

A= Kerala, B= Kerala, C= Goa & D= Goa
Tax rate = 18%

Particular A to B B to C C to D
Transaction Value 10,000 12,000 14,400
CGST @ 9% 900 1,296
SGST @ 9% 900 1,296
IGST @ 18% - 2,160 -
Total Tax 1,800 2,160 2,592
Total Price 11,800 14,160 16,992
Input tax credit
available
CGST - 900
SGST - 900
IGST - 2,160
Amount Paid to
Government A B C
CGST 900 -
SGST 900 432
2160-
IGST 1800= 360 -
Total 1,800 360 432

Total Tax = 1800+360+432= 2592

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 GST –Seamless flow of input tax credit

Order of utilization of input tax credit –

First, IGST credit should be utilized towards IGST payment, and then
towards payment of CGST and SGST/UTGST in any order and in any
proportion.

After entire ITC of IGST is utilized, ITC of CGST should be utilized for
payment of CGST and IGST in that order. Thereafter, ITC of SGST/UTGST
should be utilized for payment of SGST/UTGST and IGST in that order.

o It may be noted that ITC of CGST cannot be utilized for payment of

SGST/UTGST and vice versa.
o ITC of SGST/UTGST should be utilized for payment of IGST, only after
ITC of CGST has been utilized fully.

Output Tax liability of

IGST CGST SGST

IGST 1 2 (Any proportion)

Input tax CGST 4 3 No
credit
available SGST 6 No 5

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 GST –Seamless flow of input tax credit

Question-1
Compute the net GST liability payable in cash?
Particulars Output tax
IGST 2160
CGST 500
SGST -
Total 2660
Input tax
IGST 1000
CGST 900
SGST 900
Total 2800

Answer
Balance
Cash to Carry
Particular IGST CGST SGST Pay forward
Output tax 2160 500 0
Set off
IGST 1000 - -
CGST 400 500 0 - -
SGST 760 - 140

Cash = 0, SGST carry forward= 140

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 GST –Seamless flow of input tax credit

Question 2
Compute the net GST liability payable in cash?

Particulars Output tax

IGST 500
CGST 1,500
SGST 2,000
Total 4,000
Input tax
IGST 3,000
CGST 500
SGST 200
Total 3,700

Answer
Balance
Cash to Carry
Particular IGST CGST SGST Pay forward
Output tax 500 1500 2000
Set off
IGST 500 1,000 1,500 - -
CGST - 500 - - -
SGST - - 200 300 -

Cash= 300 SGST, Carry forward Nil

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 GST –Seamless flow of input tax credit

Alternative
Balance
Cash to Carry
Particular IGST CGST SGST Pay forward
Output tax 500 1500 2000
Set off
IGST 500 1,500 1,000 - -
CGST - - - - 500
SGST - - 200 800 -

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 GST –Seamless flow of input tax credit

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