Can IGST be adjusted against SGST?

Integrated Goods and Services Tax, or IGST can be set off against other taxes within the Goods and Services Tax (GST) system in India. GST is a comprehensive indirect tax levied on the supply of goods and services across India, and it replaces multiple taxes like central excise duty, service tax, additional customs duty, etc. People get confused to try to deliberately find the answer to can we adjust IGST with SGST so let me help them out. You cannot directly adjust or set off IGST with SGST. Both are components of Goods and Services Tax and cannot be used against each other.

Can I adjust IGST with CGST and SGST?

Yes, you can adjust IGST (Integrated Goods and Services Tax) with both CGST (Central Goods and Services Tax) and SGST (State Goods and Services Tax), but only in certain circumstances, like-

• Utilising IGST for IGST liability: When you have an IGST liability arising from inter-state supplies or imports, you can use the available IGST credit to set off this liability. 

• Cross-utilization of IGST for CGST and SGST: If you have any IGST credit left after adjusting it against your IGST liability, you can use that credit to set off your CGST and SGST liabilities. This is applicable when you have intra-state supplies (within the same state) and need to pay both CGST and SGST. 

So if you are wondering, can we use CGST and SGST credit against IGST do learn that no, you cannot. Each of these components is considered a separate tax, and their credits can only be used against their respective tax liabilities.

This is what I know about CGST, SGST and GST uses.

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The concept of taxation and its types are difficult to understand. However, once you start learning the terms in detail, you will get to know their differences and also how they are interconnected. The main components of taxation are  CGST, SGST, and IGST. So, before I answer the question can SGST be adjusted against IGST, which is where most people get stuck, let me define these terms. 

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CST means Central Goods and Service Tax, a service tax covered under the Central Goods and Service Tax Act 2016. Taxes collected under this umbrella provide revenue for the central government. Here are some of the taxes under CGST-

• Central excise duty

• Additional Excise duty

• Special Excise Duty

• Central Sales Tax

• Service Tax etc

SGST stands for State Goods and Service Tax. Taxes collected under this umbrella provide revenue for the state government. The taxes falling under this umbrella are

• Added Tax

• Entertainment Tax 

• Luxury Tax 

• Entry Tax etc

IGST stands for Integrated Goods and Service Tax. Revenue collected from IGST gets divided by the central and state governments as per government rules. IGST is charged for the transportation of goods and services from one state to another.

Is SGST adjusted with IGST?

Yes, SGST gets adjusted with IGST, but on one condition. One has to use the IGST credit before using the SGST completely to get it adjusted. This condition is also to be maintained for IGST adjustment against CGST and SGST. In short, the taxpayer has to use the IGST credit first, and then only the CGST or SGST will be set off. I hope this answers when IGST can be adjusted against SGS. 

Things must have become simpler now. This is what I can say to answer the query- can SGST be adjusted against IGST or not and also when can it be done.

Tax payment is a tedious task for me. I hate taxes and I think many other people here will resonate with me. It is just too complicated for my understanding. I will admit that. Anyway, I too had a similar query like yours so I asked my Chartered Accountant can IGST be adjusted against SGST? He told me a few things about it. Here is what I got to know.

The earlier provision suggested that Input IGST should be first utilised against output IGST. the balance if any will then be utilised against output CGST and then output SGST. 

As per the new provision,  Input IGST should be first utilised against output IGST. The balance, however, can be adjusted against output CGST and output SGST in any particular order.

You should know these:

• IGST: Integrated Goods and Services Tax

• CGST: Central Goods and Services Tax

• SGST: States Goods and Services Tax

I hope your question: can IGST be adjusted against SGST is answered now.

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