The GST set-off rule (primarily Rule 88A/Section 49) mandates that Integrated GST (IGST) input tax credit (ITC) must be fully exhausted first against any output liability (IGST, CGST, or SGST/UTGST) in any order. Once IGST credit is zero, CGST/SGST credits are used for their respective liabilities before cross-utilizing for IGST.
According to GST rules, the following sequence should be followed: IGST credit should be utilized first for IGST liability. CGST credit should be utilized for CGST liability before being set off against IGST. SGST credit should be used for SGST liability before being set off against IGST.
As a manufacturer or provider of goods and services, you receive credit for paying input tax when you procure goods and services to run your business. You are liable to pay output tax on the sales done in your business. You can offset the output tax against the input tax that you have paid.
✔ If monthly taxable turnover > ₹50 lakh (excluding exempt and zero-rated supplies), ✔ Minimum 1% of GST liability must be paid in cash, ✔ The remaining 99% may be paid through ITC. Applicable to registered persons under GST whose monthly taxable supply exceeds ₹50 lakh.
Effective April 1, 2025, businesses with an Annual Aggregate Turnover (AATO) exceeding ₹10 crore must report B2B e-invoices to the IRP within 30 days from the invoice date. Previously, this rule applied only to taxpayers with AATO above ₹100 crore.
India's GST regime is undergoing a landmark transformation with the 56th GST Council meeting unveiling GST 2.0 - next-generation reforms simplifying tax slabs to 5%, 18%, and 40%. Effective from September 22, 2025, these reforms aim to ease compliance, boost consumption, and fuel economic growth.
You are eligible for this credit if you are a resident of Canada for income tax purposes at the end of the month before and at the beginning of the month in which the CRA makes a payment (read When your GST/HST credit is paid). In the month before the CRA makes a quarterly payment, you must be at least 19 years old.
At each stage of sale or purchase in the supply chain, the tax is collected on value-added goods and services, through a tax credit mechanism. GST is levied on the supply of all goods and services except the supply of liquor for human consumption which is still liable to state excise duties and the VAT.
Here is the correct order of set-off: Use IGST ITC to pay IGST liability. If IGST ITC remains, use it to pay CGST liability. After paying CGST liability, use any remaining IGST ITC to pay SGST/UTGST liability.
For any standard-rated supplies of goods or services that you make on or after 1 Jan 2024, you must charge GST at 9%. For instance, if you issue an invoice and receive payments for your supply on or after 1 Jan 2024, you must account for GST at 9%.
GST is leviable only if aggregate turnover is more than 20 lacs. (Rs. 10 lacs in 11 special category States). For computing aggregate supplies turnover of all supplies made by you would be added.
Section 16(2) and Rule 37
If he made payment within 180 days to the supplier within 180 days than no reversal is required. If he made proportionate payment to supplier with GST within 180 days then he has to reverse ITC proportionately . If No payment is made within 180 days, then whole the ITC has to be reversed.
Subtracting GST:
Types of GST in India
CGST (Central Goods and Services Tax) SGST (State Goods and Services. IGST (Integrated Goods and Services Tax) UTGST (Union Territory Goods and Services Tax)
The GST rates in India have been simplified to three main slabs: 5%, 18%, and 40%. The 5% rate applies to essentials and common household goods, the 18% rate is the new standard for most consumer products and services, and the 40% rate is for luxury and "sin" goods.
Form GSTR-9 is an annual return to be filed once for each financial year, by the registered taxpayers who were regular taxpayers, including SEZ units and SEZ developers. The taxpayers are required to furnish details of purchases, sales, input tax credit or refund claimed or demand created etc. in this return.
Businesses often deal with GST set-off, and a simple example can help explain how to use Input Tax Credit (ITC) correctly. Imagine a business has to pay three types of taxes: IGST of ₹15,000, CGST of ₹10,000, and SGST of ₹5,000. First, the business can use ₹12,000 from its IGST ITC to pay part of the IGST tax.
When you charge GST on your sales, you are required to pay GST to the ATO. However, you can offset this cost by claiming GST credits on your business expenses.
The De Minimis Rule determines whether businesses can claim input tax on exempt supplies. It applies only if the exempt supplies meet these conditions: The monthly average of exempt supplies is $40,000 or less, AND. The value of exempt supplies is 5% or less of total taxable and exempt supplies for that period.
The New GST Rate Structure
The 12% and 28% slabs were eliminated and replaced with a new structure, which is now primarily 0%, 5%, 18%, and a 40% rate for luxury and “sin” goods. This change has impacted the pricing of many goods, including: Reduced to 18%: Items like electronic appliances and small cars.
GST amount = (Price x GST%)
Net price = Cost of the product + GST amount. For example, if a product or service costs Rs. 100 and the GST levied on that is 18%, the GST amount will be 100 x 18% = Rs. 18.
The GST exemption essentially allows the earmarking of transfers, made during lifetime or at death, that either skip a generation or are made in trust for multiple generations.
The credit is designed to assist Canadians with low-to-moderate incomes. Single individuals making $52,255 or more (before tax) are not entitled to the credit. A married couple with four children cannot exceed an annual net income of $69,015.
1. Is the GST registration limit 20 lakhs or 40 lakhs? GST registration limits in regular category states are ₹40 lakhs for goods and ₹20 lakhs for services. Special category states have a limit of ₹20 lakhs.
GST Updates & Amendments in 2025: Key Changes to Know
One of the key GST updates under 2.0 reform is that it simplified the GST tax structure from a 4-slab (5%, 12%, 18% and 28%) to a 3-slab (5%, 18% and 40%). GST Council, however, meets every quarter to improve the system.