Question ID : 37973

Blocking of Credits - Sec 49A of CGST Act

One of my clients is engaged in trading. Typically, Interstate purchases are 90% and intra state purchase are 10% of total purchases. All sales are intra state. With the introduction of Sec 49A, it seems that CGST credit shall never be available for utilisation to him. Is there any way to overcome this unwarranted blocking of credits. Thanks

Answer ID : 76274

Section 49A, has prescribes different set of rules of offsetting the GST credit standing in the books of accounts. You have to follow the new rule for off setting and you will get the credit to maximum extent. However certainly your level of credit would be lesser than the credit available for set off erstwhile.

Answer ID : 76286

In the current modus operandi, the CGST Credit may never be utilized, but you may take steps to mitigate the impact by rearranging the Transaction structure to the extent possible. For Example, If your supplier has a local presence as well, asking him to issue a local invoice to reduce IGST Credit and utilize the CSGT Credit, if that is not possible, Substituting Local Purchase with inter-state, As there no solution in GST Law for this.

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