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Seamless flow of credit under GST - A myth?


Cross utilisation of ITC credit in GST regime

The conclusions drawn by the authors appear to be based on improper understanding of the proposed GST Law and procedures.

Let us Start with the first illustration, wherein the supplier in Delhi, assembles goods in Delhi for a receiver in Maharashtra, is considered as intra-state supply and therefore discharges CGST & SGST and not IGST. The same could be availed and utilised by the receiver as per ITC credit norms proposed. Similarly in the second illustration, the receiver could avail credit of SGST and utilise the same for payment of SGST and IGST in that order, if it is B2B transaction. Therefore the hypothesis of the authors are based on non-understanding of the scheme of ITC credit, I feel.

However for the benefit of the readers, the ITC credit scheme proposed in GST regime includes allowing cross utilisation of ITC credit in certain order, which are, in a nutshell as follows: ITC of (i) IGST is allowed for payment of IGST, CGST & SGST in that order (ii) CGST is allowed for payment of CGST & SGST (iii) SGST is allowed for payment of SGST & IGST in that order. In cases of B2B transactions, provisions are made to seek refund of unutilised credit, subject to certain conditions. Such refund is also available in instances of Exports.The B2B transactions is a subset of B2C (consumer) transaction. The objective of the indirect taxes in GST regime is that the intermediary (B- Business) collects taxes from the ultimate consumers (C) only to the extent of value addition happening during his transactions and not beyond.

M G Kodandaram, NACEN, Bengaluru.

madihally kodandaram 12/06/2016

 

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