The GST council took a significant step towards easing the input tax credit utilization mechanism by allowing the company to take credit of IGST paid to set off the liabilities of SGST and CGST in whichever proportion or the order they feel suitable.
Earlier there were some restrictions on using the input tax credit under which the one has to utilize whole IGST credit to set off the SGST liability before moving on to the CGST liability.
But the recently announced GST circular states that now the IGST credits can be utilized flexibly, however, the IGST liability set off is compulsory and levies as previously.
As per a tax expert, “This was a much-needed clarification, and it brings to rest varied interpretations apprehended by industry experts on the utilisation of IGST credit.”
This move has been considered as a good gesture towards the industries and businesses drying up from the capital scarcity. Many of them have speculated the said circular to be in line with the ongoing Lok Sabha elections making favourable conditions for the government.
