When it comes to practical implementation, the GST portal consists of three pillars that provide a snapshot of the transactions undertaken on the GST portal. These are the electronic ledgers of GST which include:
In this guide, we will be discussing the meaning of electronic credit ledger in GST and how it functions.
Form GST PMT-02 is the electronic credit ledger in GST that displays the credit availed, utilised and the balance lying in the registered person’s account for the selected period. You can check your electronic credit ledger in GST by following the below steps
Login to your GST Portal >> Click on ‘Services’ tab >> Select ‘Ledgers’ >> Select ‘Electronic credit ledger’
A dashboard will appear showing the ‘Financial Year’, ‘Current Month’ and the ‘ITC balance’ as on the date on which you have opened your electronic credit ledger. It will provide three options viz.
The credit availed of by the registered person through the filing of return is credited in the electronic credit ledger in GST. This credit can be used to either set off against IGST, CGST, or SGST or to avail of a refund if it satisfies the prescribed conditions. The provisional credit balance shows the balance of provisional and mismatch credit while the blocked credit balance shows the amount of ITC blocked.
The amount utilised or availed of as a refund is debited from the electronic credit ledger. If the electronic credit ledger refund is rejected, the amount is re-credited back to the ledger through an order made in Form GST PMT-03. Also, if the amount has been wrongly paid as tax or the tax has been paid in excess by debiting the electronic credit ledger, then the same can be recredited by an order passed by the proper officer in Form GST PMT-03.
GST Law has sequenced the utilisation of credit from the electronic credit ledger in GST. However, contradictory provisions have been stated by the act and the rules thereunder.
1) As per Section 49(5) of the CGST Act, 2017-
2) Section 49A provides that the IGST credit shall be fully exhausted before utilising CGST and SGST credit.
3) As per Rule 88A of the CGST Rules, 2017-
There are contradictory positions as stated by Section 49(5) and Rule 88A. Practically speaking, the GST portal requires IGST credit to be fully utilised before utilising CGST and SGST credit. However, after payment of IGST liability, the remaining IGST credit is allowed to be utilised against CGST and SGST liability in any order. This was also clarified in Circular No. 98/17/2019-GST Dated 23rd April 2019.
Further, as per Rule 86B, for registered persons whose value of taxable supply, excluding exempt and zero-rated supply, exceeds Rs. 50 lakhs in a month, then only 99% of the output tax liability can be discharged using the electronic credit ledger (i.e., through the utilisation of ITC). The remaining 1% shall be discharged using the electronic cash ledger.
The Commissioner or any of his authorised officers can block the ITC available in the electronic credit ledger in case he has reasons to believe that such input tax credit has been fraudulently availed or is ineligible because:
However, if the commissioner or authorised officer is satisfied that the above conditions no longer exist, then he may allow debit of the electronic credit ledger for utilising against payment of tax or refund of ITC. The above restrictions shall automatically cease to expire within 1 year from the date on which they were imposed.
Above was the comprehensive coverage about electronic credit ledger in GST. In case of any query, please feel free to contact the ASC Group.
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