Can a Registered Person Claim ITC Paid on CGST and SGST of Other States?

As per the GST laws, Input Tax Credit (ITC) means the credit of CGST, SGST, and IGST charged on any supply of goods and/or services used, or intended to be used, in the course or furtherance of business. ITC is a crucial component of GST as it enables the registered taxpayers to reduce their tax liability and avoid cascading effect.

However, a common question that arises among the taxpayers is whether they can claim ITC paid on CGST and SGST of other states where they are not registered. In this article, we will try to explore this topic and provide a detailed explanation.

ITC under GST

Before we dive into the answer to the above question, let us understand the concept of ITC and its provisions under GST.

Under GST, ITC is available to a registered person for the tax paid on the inward supply of goods and/or services, which are used or intended to be used in the course or furtherance of business. However, there are certain conditions that need to be fulfilled to claim ITC:

The taxpayer should possess a valid tax invoice or debit note issued by the supplier.
The goods and/or services should have been received by the registered person.
The tax charged on such supplies has been actually paid to the government by the supplier.
The taxpayer has furnished the monthly GSTR-3B and annual GSTR-9 returns.
The taxpayer has not claimed ITC in excess of 110% of the eligible credit available in respect of invoices or debit notes reflected in GSTR-2A/2B.

Any registered person who satisfies the above conditions can claim ITC on the tax paid on inward supplies of goods and/or services. However, the question of claiming ITC on CGST and SGST paid in other states requires a deeper understanding of the GST laws.

ITC on CGST and SGST of Other States

As per the GST laws, a registered person can claim ITC on the CGST and SGST paid in the same state where he is registered. The same rules apply to IGST as well. However, when it comes to claiming ITC on CGST and SGST paid in other states, the situation becomes a bit complicated.

The GST laws have provisions for inter-state supply of goods and/or services. When a registered person procures goods and/or services from another state, the supplier charges IGST, which is distributed between the Center and the concerned state. In such cases, the registered person can claim ITC on the IGST charged by the supplier.

However, when a registered person procures goods and/or services from another state and the supplier charges CGST and SGST, the situation becomes tricky. As per the GST laws, a person can claim ITC only on the tax paid in the same state where he is registered. This means that a registered person cannot claim ITC on the CGST and SGST paid in other states where he is not registered.

Let us understand this with an example:

Suppose Mr. A is a registered person in Maharashtra and he purchases goods worth Rs. 1 lakh from a registered person in Gujarat. The supplier charges CGST @ 9% and SGST @ 9% on the invoice. The total tax charged on the invoice is Rs. 18,000 [(Rs. 1,00,000*9%)+ (Rs. 1,00,000*9%)].

Now, Mr. A cannot claim ITC on the CGST and SGST paid in Gujarat as he is registered in Maharashtra. He can only claim ITC on the IGST charged by the supplier, which is Rs. 18,000 [(Rs. 1,00,000*18%)].

Conclusion

In conclusion, a registered person cannot claim ITC on CGST and SGST paid in other states where he is not registered. He can only claim ITC on the IGST charged by the supplier in cases of inter-state supply of goods and/or services. It is crucial for taxpayers to understand these provisions to avoid any confusion or wrong claims while filing their GST returns.