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ITC on CGST paid in another State

T. K. GOPINATHAN

FCA, DISA, B.com

Generally any tax paid under GST Act, except blocked credit, is eligible for ITC, provided the goods/services supplied is used for the furtherance of business. However, on going through the various definitions in the CGST Act, it can be stated that ITC on CGST is not available if the tax is paid in a different state. To support this view, the following definitions are to be referred and it may be reproduced in the chronological order:

ITC is available under Section 16(1):-

Every registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person.

“Input Tax” is defined under Section 2(62):-

Input Tax” in relation to a registered person, means the central tax, State tax, integrated tax or Union territory tax charged on any supply of goods or services or both made to him and includes—

“Central Tax” under Section 2(21):-

Central tax” means the Central Goods and Services Tax levied under section 9.

“Central Goods and Services Tax” is charged under Section 9(1) as:-

Subject to the provisions of sub-section (2), there shall be levied a tax called the central goods and services tax on all intra-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption, on the value determined under section 15 and at such rates, not exceeding twenty per cent., as may be notified by the Government on the recommendations of the Council and collected in such manner as may be prescribed and shall be paid by the taxable person.

After analyzing the above definitions in the CGST Act, it can be seen that CGST is livable only on intra-state supplies, which alone can be treated as central tax, central tax is the input tax and credit can be taken only on input tax. Thus a GST registered recipient cannot avail input tax credit on CGST paid in another State.


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