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Update as on 22nd December 2020

The following are the changes in Rule 36(4) from 1st January 2021:
1. ITC shall be available as per the invoices uploaded by the respective suppliers either in their GSTR-1 or by using the Invoice Furnishing Facility (IFF).

2. The recipients can claim a provisional input tax credit in GSTR-3B to the extent of 5% instead of earlier 10% of the total ITC available in GSTR-2B for the month.

3. Certain taxpayers cannot make GST payment from their electronic credit ledger in excess of 99% of the total tax liability for the tax period as per a new rule 86B.

Every registered person is required to compute his tax liability on a monthly basis by setting off the Input Tax Credit(ITC) against the Outward Tax Liability. If there is any balance tax liability the same is required to be paid to the government.

There are 3 ledgers prescribed by the government that is required to be maintained by every tax payer –

  1. Electronic Tax Liability Ledger 

The electronic tax liability ledger shows the total tax liability of a registered person at any point of time. This detail can be accessed on the GST portal of a registered tax payer


Payment Process under GST

  1. Electronic Cash Ledger 

An Electronic Cash Ledger will also be maintained on the GST portal. It will display the total amount deposited by the tax payer towards discharge of his tax liability or interest or late fee or penalty any other amounts. Also, it is now mandatory for businesses making payment for more than Rs 10,000 to do it electronically. 

To know more on how to GST check our Guide on GST Payment

  1.   Electronic credit ledger 

All the taxes paid on the inputs would be recorded in the electronic credit ledger. The input tax credit in each of the cases mentioned below, shall also be transferred to the electronic credit ledger: 

  • ITC available to the branch for the amount of credit transferred by ISD
  • ITC allowed on input held in stock and the semi-finished or finished goods would be credited to electronic credit ledger if the taxpayer applies for registration within 30 days of becoming liable to pay tax.
  • ITC available on the input held in stock and semi-finished or finished goods by a taxpayer in the composition scheme converting to a normal taxpayer shall be transferred to electronic credit ledger.
  • ITC available due to the taxes paid under the reverse charge mechanism shall also be transferred to the electronic credit ledger.
  • ITC available on goods/services used for the business and other purposes shall only be allowed to the extent applicable for business purposes.

All the payments under GST have to be made by either using the input tax credit available in the electronic credit ledger or through the electronic cash ledger.

Payment Process under GST

Utilizing ITC for the fulfillment of Tax liability:

IGST: After the IGST input tax credit is used for payment of IGST then the remaining ITC can be used to pay tax liability under CGST and SGST.

CGST: The CGST input tax credit cannot be used to pay the SGST liability but can be used to pay the liability under CGST. Further, the balance of CGST credit available can be used to pay the IGST liability.

SGST: The SGST input tax credit cannot be used to pay the CGST liability but can be used to pay the liability under SGST. Further, the balance of SGST credit available can be used to pay the IGST liability.


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