Offsetting IGST payment with CGST or SGST – Cross utilization of IGST, CGST or SGST payments under GST

1.0 Introduction

Taxpayers are filing the GST tax return (GSTR 3B) for the first time and most people are making mistakes as they are confused between the three different acts i.e. CGST, SGST or IGST. Many taxpayers have paid IGST instead CGST and while some others has paid vice-versa.

After making the payments, now they are asking whether they can cross utilize the payment of IGST against the CGST liability or not. This is because once they click on the submit button, they cannot hold back.

Let us discuss this problem in bit details so that we can find out the possible solution.

2.0 The Problem of wrong payments made under GST

While uploading GSTR3B, we have entered the correct value for IGST, CGST, and SGST. In other words, after filling the necessary details in GSTR 3B, we have a total output tax liability of Rs.50,000 divided into IGST, CGST, and SGST.

However, while entering the payment challan, by mistake we have interchanged the IGST and the CGST amount and made the payment. Due to this the liability and the payment are not matching and hence we could not file our GSTR 3B return.

Now, the question is that how do we reverse the IGST and CGST in our cash ledger so that we can Offset liability under the Tax payment and file the GSTR3B.

3.0 Analysis of the legal provisions for above facts

Under GST law, the payment of GST can be made from the two sources:

• By utilization of Input Tax Credit (ITC)
• By offsetting payments from electronic cash ledger.

Under first case, where utilization of ITC is used for payment of output tax liability, the cross utilization between IGST and CGST can happen. In other words, the excess credit of IGST can be utilized for the payment of CGST or SGST.

However, the problem lies with the second case. The cross offsetting of payment in cash ledger is not allowed. I.e. if you have made the payment for IGST, then the same cannot be utilized for making the payment of CGST or SGST.

4.0 Answer to the above query

Since the cross utilization of cash payment is not allowed, the reversal of cash payments is not allowed.

5.0 Possible solution to this deadlock?

First of all, you should not worry about the excess payments made or wrong payment made. E.g. IGST is paid instead of CGST. This is because the same shall remain like a PAYTM balance which you can utilize against the future tax payment.

Now the only solution for the above problem is to make the payment for any remaining output tax liability and if any mistake is done, the same is to be corrected via filing GSTR 1, 2 and 3. This is because GSTR 3B is only a provisional return and any details filled in this return can be changed via GSTR 1, 2 and 3.

Therefore, since you cannot change the field under GSTR 3B, it is recommended to file the return wrongly and then revise the values by filing the GSTR 1, 2 and 3 in the month of September.

6.0 Conclusion

At the end of this article, we can conclude that since cross utilization of payment made cannot be done, you need to take another way to file your GST return. Another way is to remake the payment of any remaining output liability and keep any excess payment made which can be utilized with future tax liabilities.

If in case you have any problem, please email the same to info@hubco.in.

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