In this blog, we look at a query on possible carry forward of accumulated CENVAT credit as CGST credit, and no SGST credits while SGST would be payable on future supplies.
As part of the transitional credits, unutilised CENVAT credits would be carried forward as CGST credit only, and if the company has local supplies (intra-State), it would be liable to pay CGST and SGST. While it would use the balance of credit in CGST, SGST would be a cash outflow – how should one manage this?
Yes, the above situation would result in a case of carry forward of CGST credit balance and a payable (cash outflow) of SGST. This would arise only in cases where the company would effect local / intra-State supplies. Nevertheless, this would not apply if the purchases during the post GST period (till such time the CGST balance is exhausted) are largely inter-State. In such a situation, the credit that would accrue on inward supplies would be IGST which can be fully utilised for payment of SGST on local supplies – this would also ensure that the CGST balance does not further accumulate.
Additional Comments: Would not apply if the supplies are inter-State, since such supplies would be liable to IGST and CGST balance can be completely utilised for payment of IGST.
Author: N R Badrinath
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