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Electronic credit ledger under GST law – All you need to know

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Electronic credit ledger is maintained in Form GST PMT-02 for each register person eligible for input tax credit on the common portal. Every input tax credit as self assessed in the return of a registered person shall be credited to the electronic credit ledger.

Amount available in electronic credit ledger may be used for making payment towards output tax under this act such as central GST and state GST or Integrated GST.

Utilization of input tax credit in electronic credit ledger

As per the GST law, amount of input tax credit available in the electronic credit ledger of the registered person on account of –

  • Available credit of Integrated GST shall first be utilised towards payment of IGST. If any amount left out after paying IGST, then the remaining amount may be utilised towards the payment of central GST and state GST/UTGST, in any order and in any proportion. This means, input tax credit of IGST can be utilized either against CGST or SGST.
  • Central tax (CGST) shall first be utilised towards payment of CGST. If any amount left out after paying CGST, then the amount remaining may be utilised towards payment of integrated GST (IGST).
  • State tax (SGST) shall first be utilised for payment of SGST. Remaining amount left out after paying SGST, if any, may be used towards payment of integrated tax (IGST). Input tax credit on account of SGST shall be utilised towards payment of IGST only where the balance of the input tax credit on account of CGST if not available for payment of IGST.
  • Union territory tax (UTGST) shall first be utilised towards payment of UTGST. If any amount left after utilising, then the remaining amount should be utilised towards payment of Integrated tax (IGST). Input tax credit on account of UTGST shall be utilised towards payment of IGST only where the balance of the input tax credit on account of CGST is not available for payment of IGST.

As per section 49(5)(e) and (f) of CGST Act, the central tax (CGST) shall not be utilised towards payment of state tax (SGST) or union territory tax (UTGST) and the state tax (SGST) or union territory tax (UTGST) shall not be utilised towards payment of central tax (CGST).

Table showing order of utilization of input tax credit

Input tax credit available 1st order 2nd order Remark
IGST IGST CGST or SGST or UTGST ITC of IGST to be completely exhausted mandatorily
CGST CGST IGST Cannot be used against payment of SGST
SGST SGST IGST Cannot be used against payment of CGST
UTGST UTGST IGST Cannot be used against payment of CGST

Balance amount in electronic cash and credit ledger after payment of tax, interest, fee or any other amount under this act, or the rules made there under may be refunded in accordance with provisions of section 54.

Transfer of input tax credit or ITC

If available amount of CGST is utilised towards dues of IGST, then the amount so utilised shall be transferred by the central government to the IGST account from CGST Account.

If IGST amount is utilised towards dues of CGST or UTGST then, then central government shall transfer the utilised amount by reducing IGST account to the CGST / UTGST account.

In case the amount of IGST is utilised towards dues of SGST then, there shall be reduction in the amount of IGST. Such amount will be apportioned to the respective state government and the central government. The apportioned amount shall be transferred by the central government to the account of the respective state government.

Order in which taxable person shall discharge tax liability

Every taxable person shall discharge his tax and other dues in the following order;

  • Self-assessed tax, interest, penalty, fee and other amount payable under CGST Act and rules made thereunder related to returns of previous tax period;
  • Self-assessed tax, interest, penalty, fee and other amount payable under CGST Act and rules made thereunder related to returns of current tax period;
  • Any other amount payable under this act or the rules made thereunder including demand determined under section 73 and 74

If a person has paid tax on goods and services or both shall unless the contrary is proved by him, be deemed to have passed on the full incidence of such tax to the recipient of such goods or services or both.

Important points related to payment of tax, interest, penalty, fees and other amount

  • The date of credit to the account of government in the authorized banks shall be the deemed to be the date of deposit in electronic cash ledger.
  • A registered person can claim refund of any unutilised amount from the electronic credit ledger. The refunded amount shall be debited in the said ledger. If refund has been rejected by the proper officer, then it will again be re-credited to the electronic credit ledger.
  • The registered person is not allowed to make any direct changes in the electronic credit ledger under any circumstances. If any discrepancies found, then it should be communicated to the officer exercising jurisdiction in the matter.

Debit and credit of electronic credit ledger

Electronic credit ledger gets credited for the input tax credit on the basis of self assessed in the return in the form of IGST, CGST, SGST and UTGST. Credit amount in this ledger, then utilised for payment of output tax like IGST, CGST, SGST, UTGST in the prescribed order.