Retailers Association of India submitted a representation on Section 49A of Central Goods and Services Tax (‘CGST’) (Amendment) Act, 2018' which doesn't allow to utilize CGST and SGST credits until IGST credits are fully exhausted towards making the payment of IGST, CGST, and SGST. Click here to view the representation.

A delegation from RAI also met Shri Yogendra Garg, Principal ADG, GST of government of India to explain their concerns. Shri Garg understood the concerns and stated that the amendment carried out by way of insertion of Section 49A is to impose a restriction on cross utilizing CGST / SGST credits against IGST liability when IGST credits are available. Furthermore, he assured that the matter would be looked into and indicated that he will explore to allow IGST credit for payment of CGST and SGST in the ratio of 50 percent each.

Subsequently, after consistent follow-ups, RAI's efforts have yielded results. The sequence of IGST credit utilization has been changed by introducing Rule 88A. Based on the said Rule, IGST Credit will first be utilized against IGST liability and the balance credit will be available for set off against CGST "OR" SGST based on the option of the taxpayer. With this new mechanism, there will be no credit accumulation of credits in CGST and cash payment in SGST which was expected due to Section 49A. Click here to view the notification.