- Input Tax Credit of the taxes paid under CGST against SGST and vice versa: The basic requirement of implementing CGST and SGST under Dual GST through different statues in the country was to maintain the revenue share of the State and Centre and to maintain their sovereignty along with minimum dependence on each other for revenue. Thus, in situation where such complex are the relations and mechanism between the State and Centre and entire mechanism of National GST had to be modified to Dual GST on account of such complex relationship, then in such case the question of allowing credit of the taxes paid in CGST against SGST and vice versa would not arise at all.
If the Inter credit of SGST and CGST would have been made allowable, then Dual GST would have been nothing but National GST and it would have been better to bring National GST rather than Dual GST. Thus, Credit of the taxes paid in CGST against SGST and vice versa is not allowable on this basic principle.
2. Inter Credit of IGST against both CGST and SGST: The principal reason for implementation of IGST was to allow seamless credit of the taxes paid in the exporting State to the dealer of the Importing State via Centre acting as a clearing mechanism. Thus when the intention of implementation of IGST has been to allow credit to the dealer in the importing State of the taxes paid in exporting State, then the principle follows that the credit of IGST should be available against both CGST and SGST without any restriction.
That’s precisely the reason why IGST would be fully creditable against both CGST and SGST and Vice Versa.
Principle for Allowability of Input Tax Credit between CGST, SGST and IGST Inter se are as follows:
- Input Tax Credit of CGST is allowed against CGST and IGST.
- Input Tax Credit of SGST is allowed against SGST and IGST.
- Input Tax Credit of IGST is allowed against IGST, CGST and SGST.
- Inter Credit of CGST is not allowed against SGST and Vice Versa.