BasicFeaturesof IGST assessment, compliance and settlement :
• The system of self-assessment of tax liability and availability of input tax credit (ITC), if the buyer has received goods and services and if he is in possession of valid invoice, would apply equally to IGST.
• The supplier will pay IGST on the interstate supplies. The IGST payment can be done utilising ITC. However, the use of ITC for payment of IGST will be done using the following hierarchy,-
o First available ITC of IGST shall be used for payment of IGST.
o Once ITC_IGST is exhausted, the ITC of CGST shall be used for payment of IGST.
o If both ITC_IGST and ITC_CGST are exhausted, then only the dealer would be permitted to use ITC_SGST for payment of IGST.
o Renaming IGST liability shall be discharged using payment in cash.
o GST System will ensure maintenance of this hierarchy for payment of IGST using the credit.
• Taxpayer will upload their specified supply invoice details by 10th of the following month.
• The purchase statements would get auto populated from such supply details.
• The purchaser would be allowed to add any purchase details corresponding supply details of which have not been uploaded by the counterparty supplier.
• The supply and purchase details would be finalized by 17th of the following month.
• In case of mismatch of supply and purchase invoices, ITC would be required to be reversed after two tax periods.
• There will be system based verification of returns on monthly basis wherein invoice details filed by the supplier and those of the purchaser will be matched for verifying ITC claimed by the purchaser.
• Once the sales and purchase invoice are matched, the recipient dealer would become entitled to the ITC (including ITC of IGST) of GST paid by the dealer.
• The recipient dealer shall be able to utilise IGST credit in the manner as
mentioned above (point No. 2).
• There would be settlement of account between the centre and the states on two counts, which are as follows —
o Centre and the exporting state: The exporting state shall pay the amount equal to the ITC_SGST used by the supplier in the exporting state to the Centre.
o Centre and the importing state: The centre shall pay the amount equal to the ITC_IGST used by a dealer for payment of SGST on intra state supplies.
• The settlement would be cumulative basis for a state taking into account the details furnished by all the dealer in the settlement period.
• Similar settlement of amount would also be undertaken between CGST and IGST account.
Illustration :
Supplier ‘X’ State ‘A’ makes supply to a dealer ‘Y’ in State ‘B’:
| Value of supply= Rs 2000 | Rs 2000 |
| IGST rate=20% | 20% |
| IGST liability on such supply is Rs 400. | |
Let us assume that opening balance of credit available with seller in the books of account is as under:
ITC _ IGST = Rs. 100, ITC _ CGST = Rs. 50 and ITC _ SGST Rs. 100.
Accordingly, the IGST liability of the seller would be discharged in the following manner:
Table-I
The exporting State (A in the above case) will transfer to Centre the credit of SGST used (see entry at iv in the above Table) in payment of IGST.
The receiver ‘Y’ in State ‘B” can claim the credit of IGST while discharging the output tax liability in his own State. In case the ‘Y’ sells the goods within State of ‘B’, such sale would be liable to CGST and SGST. However, he can utilise the credit of IGST for discharging his CGST and SGST liabilities subject to rules as stated above.
Let us assume that ‘Y’ uses inputs acquired from ‘X’ for manufacture of goods in State ‘B’ and sells the entire goods so manufactured in State ‘B’
Suppose tax liability of ‘Y’ is as follows:
Output tax liability of SGST = Rs 1,000
Output tax liability of CGST=Rs 1000
Let us assume that the opening balance of credit available with ‘Y’ , before acquisition of supply from ‘X’ is as under:
IGST = Rs. 250; CGST = Rs. 500 and SGST = Rs. 300.
The credit of IGST availed on purchase of goods from ‘X’ is Rs. 400. Thus, total IGST credit available now will be Rs. 650.
Manner in which ‘Y’ would pay GST liability
[Payment of CGST liability by Ý’]
Table-II
| CGST payable | 1000 |
| Paid through ITC_CGST credit | 500 |
| Paid through ITC_IGST credit | 500 |
| CGST payable in cash | 0 |
[Payment of SGST by Ý’]
Table-III
In this case Centre will transfer to the State ‘B’ the credit of IGST used in payment of SGST, i.e. Rs 150 [S. No. (iii) in Table III refers].
This illustration shows calculations for one dealer each in State ‘’A’’ and State ‘’B’’. However, in a state there would be a large number of dealers. Some of these may acquire interstate supplies, some may be supplier of interstate supplies, and some may be doing both. Thus adjustment between Centre and the concerned state has to be worked out on net basis for all dealers in a state.