Section 9A of UTGST Act 2017: Utilisation of input tax credit (ITC)

Provisions under Section 9A of the Union Territory Goods and Services Tax (UTGST) Act, 2017 relating to “Utilisation of input tax credit (ITC)”, are as under:

Section 9A of UTGST Act 2017: Utilisation of input tax credit (CHAPTER IV PAYMENT OF TAX)

Notwithstanding anything contained in section 9, the input tax credit on account of Union territory tax shall be utilised towards payment of integrated tax or Union territory tax, as the case may be, only after the input tax credit available on account of integrated tax has first been utilised towards such payment.

Amendments History:

1. Section 9A inserted vide the UTGST (Amendment) Act, 2018 (GOI Notification dated 30/08/2018), followed with CBIC Notification 1/2019 dated 29/01/2019 on commencement date of 01/02/2019.

Commetary on Section 9A of UTGST Act, 2017

Section 9A of the Union Territory Goods and Services Tax (UTGST) Act, 2017 outlines the rules for the utilization of input tax credit (ITC) in the context of Union territory tax (UT Tax). This commentary will help in understanding the key aspects of this provision:

i) Notwithstanding clause: The provision begins with the term “Notwithstanding anything contained in section 9.” This phrase indicates that the rules specified in Section 9A will apply for the utilization of ITC, even if there are any conflicting provisions in Section 9 of the UTGST Act, 2017.

ii) Input Tax Credit (ITC): ITC is a mechanism that allows businesses to reduce the tax paid on inputs from the taxes payable on the output. In the context of UTGST, ITC refers to the credit available for the UT tax paid on the purchase of goods or services used for business purposes.

iii) Order of utilization: Section 9A prescribes the order in which ITC can be utilized for payment of taxes. According to this provision, ITC on account of UT Tax can only be used for payment of integrated tax (IGST) or UT Tax after utilizing the available ITC on account of integrated tax (IGST).

In other words, a taxpayer should first use their ITC on IGST to pay any outstanding IGST or UT Tax. Once the ITC on IGST is fully utilized, the taxpayer can then use the ITC on UT Tax to pay the remaining IGST or UT Tax.

This rule helps in ensuring a proper sequence for the utilization of ITC and avoids any potential misuse or confusion in the process. By establishing a clear order for using ITC, the UTGST Act aims to promote a more organized and efficient tax system.

Overall, Section 9A of the UTGST Act, 2017 provides specific guidelines for the utilization of input tax credit (ITC) in the context of Union territory tax. It clarifies the order of utilization, ensuring that ITC on account of integrated tax (IGST) is used first, followed by the ITC on UT Tax, thus promoting a more organized and efficient tax system.

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Note: The UTGST Act 2017 has been notified vide GOI Notification dated 12/04/2017, which has subsequently been amended  through UTGST (Amendment) Act 2018, Finance Act 2019, Finance Act 2020, Finance Act 2021, Finance Act, 2022 and Finance Act, 2023 including various Notifications issued by the Govt./ CBIC from time to time, relating to the commencement dates of various Sections/ Provisions in the respective UTGST/ Amendment Acts, wherever required. Information on this page is a Section-wise compilation of the Amendments made by various Notifications issued by CBIC from time to time, with best possible efforts for accuracy. In any case, E&OE. For official/ updated information, please visit CBIC website.