Calicut University Curriculum Compliance — Module III Overview

Course Code: COM6EJ308(4) • Course Title: Computerized Accounting with Tally • Semester: VI • Credits: 4 • Contact Hours: 60
Module III Title: TAX APPLICATION & GST COMPLIANCE IN TALLY (10 Contact Hours)
Syllabus Units Covered: Unit 3: Introduction to GST — Architecture of Dual GST (CGST, SGST, IGST, UTGST, Cess), Statutory Background • GST Activation in Tally — F11 Setup, 15-Digit GSTIN Structure, Regular vs. Composition Registration • Tax Rate Hierarchy & Classification — Mapping Tax Rates & HSN/SAC Codes at Company, Group, Item & Ledger Tiers • Input Tax Credit (ITC) Mechanics — Eligible ITC, Blocked Credits (Sec. 17(5)), Reverse Charge Mechanism (RCM) • Tax Invoices, Credit Notes & Debit Notes — Statutory Mandates under Section 31 & Rule 46 • GST Returns in Tally — GSTR-1 (Outward Supplies), GSTR-3B (Summary Return), GSTR-2B Matching, Tax Offset & Payment • Advanced Modern Features — E-Invoicing, E-Way Bill Integration, QR Code Compliance • Calicut University Academic Examination Bank (Part A: 2 Marks, Part B: 5 Marks, Part C: 10/15 Marks).

1. Overview: Automated Statutory Taxation in Modern Enterprise ERP

The implementation of the Goods and Services Tax (GST) on 1st July 2017 fundamentally reshaped Indian commercial accounting. GST replaced a fragmented maze of cascading indirect taxes (Central Excise, Service Tax, State VAT, Entry Tax, Luxury Tax) with a unified, digital, destination-based consumption tax. In this regime, manual tax calculation is practically obsolete: compliance requires real-time validation of 15-digit GSTINs, automatic determination of Place of Supply (POS) for tax splitting, HSN/SAC code tracking, and automated electronic return generation.

Tally Prime incorporates a built-in statutory tax engine that automates end-to-end GST administration. When an invoice is entered, Tally determines whether the transaction is Intra-State (triggering CGST + SGST) or Inter-State (triggering IGST), calculates taxes with mathematical precision, validates eligibility for Input Tax Credit (ITC), flags blocked credits under Section 17(5), and populates statutory returns (GSTR-1 and GSTR-3B) with zero manual intervention. Module III provides an exhaustive academic and procedural analysis of GST taxation in Tally.

The Four Structural Pillars of GST in Tally Prime Module III Architecture

1. ACTIVATION & TAX HIERARCHY

• F11 Statutory Activation: State, GSTIN, Regular vs. Composition scheme.
• HSN/SAC Mapping: 5-tier tax rate hierarchy (Company to Voucher level).
• Duties & Taxes Ledgers: CGST, SGST, IGST, and Cess under Current Liabilities.

2. DYNAMIC TAX COMPUTATION & RCM

• Place of Supply (POS): Automatic routing of Intra-State vs. Inter-State taxes.
• Reverse Charge (RCM): Self-invoicing, tax liability booking, and ITC claims.
• Composite GST: Turn-over based tax calculation for small retailers.

3. STATUTORY INVOICING & E-WAY BILLS

• Tax Invoices: Mandatory Section 31 compliance and consecutive numbering.
• Debit & Credit Notes: Adjusting turnover and ITC with original invoice tagging.
• E-Invoicing & E-Way Bills: Live JSON generation and portal API synchronization.

4. RETURN FILING & RECONCILIATION

• GSTR-1 Preparation: B2B, B2C Large, B2C Small, HSN Summary tables.
• GSTR-3B Consolidation: Eligible vs. ineligible ITC and tax offset rules.
• GSTR-2B Matching: Resolving vendor mismatches and protecting cash flow.

2. GST Setup, Registration Types & The Five-Tier Tax Hierarchy

A. F11 Company Statutory Setup and GSTIN Architecture

Enabling GST in Tally Prime requires configuring parameters under F11 → Enable Goods and Services Tax (GST):

State & Registration Type: Designating the home operating state (e.g., Kerala - State Code 32) and selecting between Regular (standard monthly/quarterly tax filer claiming ITC) and Composition Scheme (small dealers paying concessional turnover tax without ITC).
GSTIN / UIN Structure: The mandatory 15-character alphanumeric Goods and Services Tax Identification Number:
[State Code: 2 Digits (e.g., 32)] + [Entity PAN: 10 Alphanumeric] + [Entity Number: 1 Char] + [Default 'Z'] + [Checksum: 1 Char].
Periodicity of GSTR-1: Configuring filing frequency: Monthly (turnover > ₹5 Crore) or Quarterly under the QRMP (Quarterly Return Monthly Payment) scheme.

B. The Five-Tier GST Rate Hierarchy in Tally

Tally features a sophisticated inheritance hierarchy that resolves tax rates and HSN/SAC codes from top to bottom. If a rate is not defined at a lower level, Tally automatically inherits it from the level above:

Hierarchy Tier	Configuration Level	Appropriate Business Deployment
Tier 1: Company Level	`F11 → GST Details`	Best for single-product businesses where all goods share the same tax rate (e.g., a garment manufacturer where 100% of products attract 12% GST).
Tier 2: Stock Group Level	`Create / Alter → Stock Group`	The industry standard for multi-category traders. E.g., setting 5% on "Food Grains" group and 18% on "Stationery" group; all child items inherit automatically.
Tier 3: Stock Item Level	`Create / Alter → Stock Item`	Applied when specific items within a group carry exceptional rates or distinct 8-digit HSN codes. Overrides Stock Group rates.
Tier 4: Ledger Level	`Create / Alter → Ledger Master`	Standard for service expense ledgers (e.g., Auditing Fees assigned 18% under SAC 9982) and dedicated tax-rate sales ledgers (e.g., "Sales @ 18%").
Tier 5: Voucher Level	`Voucher Entry Screen → F12 Configuration`	Manual transaction override during live voucher entry; takes ultimate precedence over all preceding tiers.

3. Input Tax Credit (ITC), Reverse Charge & Composite Scheme

A. Input Tax Credit (ITC) Mechanics

Input Tax Credit (ITC) is the mechanism allowing a registered business to deduct the GST paid on purchases (raw materials, capital equipment, operational services) from the GST collected on sales:

Mathematical Mechanics of Net GST Liability
`Net GST Payable to Government = Output Tax Liability (on Sales) - Eligible Input Tax Credit (on Purchases)`

Statutory Rules of Credit Utilization (Section 49):
1. IGST Credit: Must be completely exhausted first against Output IGST, then Output CGST, and finally Output SGST in any order.
2. CGST Credit: Used against Output CGST, then Output IGST. (CGST Credit can NEVER be offset against Output SGST).
3. SGST Credit: Used against Output SGST, then Output IGST. (SGST Credit can NEVER be offset against Output CGST).

B. Blocked / Ineligible Input Tax Credit (Section 17(5))

Under Section 17(5) of the CGST Act, certain purchases are statutorily ineligible for ITC, even if used for business purposes. In Tally, the accountant marks these as Ineligible ITC:

Motor vehicles for transportation of persons having seating capacity ≤ 13 persons (except when used for commercial passenger transport or driving schools).
Food and beverages, outdoor catering, beauty treatment, and health insurance (unless mandated by statutory law for employees).
Goods lost, stolen, destroyed, written off, or disposed of as free gifts or commercial samples.
Works contract services for construction of immovable property (except for plant and machinery).

C. Reverse Charge Mechanism (RCM) in Tally

Under normal GST, the supplier collects tax and remits it. Under Reverse Charge Mechanism (RCM) (Sections 9(3) and 9(4)), the recipient is legally obligated to pay GST directly to the government:

RCM Scenarios: Procuring Goods Transport Agency (GTA) freight services, legal services from advocates, sponsorship services, or importing services from foreign vendors.
Tally Accounting Cycle: (1) Record purchase voucher checking "Is Reverse Charge Applicable = Yes"; (2) Pass a Journal voucher (F7) using Statutory Adjustment to raise tax liability (Tax on RCM A/c Dr. To Output CGST/SGST); (3) Discharge tax in cash via Challan PMT-06; (4) Claim equivalent ITC in the next month's GSTR-3B.

4. Statutory Invoicing, Credit/Debit Notes & Modern E-Invoicing

A. Statutory Tax Invoice Requirements (Section 31 & Rule 46)

A valid GST Tax Invoice generated from Tally must display:

Consecutive serial numbering unique for each financial year, containing only letters, numerals, and slashes/hyphens.
Name, registered address, and 15-digit GSTIN of the supplier and recipient.
Place of Supply (POS) along with state name and state code.
HSN/SAC codes, description, quantity, taxable value, and explicit tax split (CGST, SGST, IGST).
Digital signature / authorized signatory physical signature.

B. Modern Electronic Invoicing (E-Invoicing) & E-Way Bills

Under Central Board of Indirect Taxes and Customs (CBIC) mandates, registered businesses with aggregate turnover exceeding prescribed thresholds (currently ₹5 Crore) must generate E-Invoices:

Compliance Mechanism	Regulatory Standard & Threshold	Tally Prime Integrated Workflow
Electronic Invoicing (E-Invoice)	Mandatory for B2B supplies where turnover > ₹5 Crore. Requires uploading invoice payload to the Invoice Registration Portal (IRP).	Tally Prime connects directly to the IRP via API, transmits invoice JSON, and retrieves the 64-character Invoice Reference Number (IRN) and encrypted signed QR Code, printing them on the invoice in real time.
Electronic Way Bill (E-Way Bill)	Mandatory for movement of goods where consignment value exceeds ₹50,000 (Inter-State) or ₹1,00,000 (Intra-State in Kerala).	Tally auto-generates E-Way Bill JSON containing Part A (goods details) and Part B (vehicle number / transporter ID), automatically fetching the 12-digit E-Way Bill Number.

5. Statutory GST Returns & Reconciliation in Tally Prime

A. GSTR-1: Outward Supplies Statement

GSTR-1 is the monthly/quarterly return reflecting all outward sales of goods and services. Tally automatically maps transactions into statutory reporting tables:

Table 4 (B2B Invoices): Sales to registered persons holding valid GSTINs. Requires invoice-level detail.
Table 5 (B2C Large): Inter-state sales to unregistered consumers where invoice value > ₹2,50,000.
Table 7 (B2C Small): Intra-state sales and small inter-state sales to unregistered consumers, reported in state-wise consolidated summaries.
Table 9 (Credit / Debit Notes): Adjustments to registered and unregistered invoices.
Table 12 (HSN-wise Summary): Consolidated summary of goods and services categorized by HSN/SAC codes, total quantity, total taxable value, and tax amounts.

B. GSTR-3B: Consolidated Monthly Summary Return

GSTR-3B is the self-declared summary return used to discharge monthly tax liabilities:

SECTION 3.1: OUTWARD SUPPLIES & RCM

• 3.1(a): Total outward taxable supplies (other than zero rated, nil, and exempted).
• 3.1(b): Outward taxable supplies (zero-rated exports).
• 3.1(d): Inward supplies liable to reverse charge (RCM).

SECTION 4: ELIGIBLE INPUT TAX CREDIT (ITC)

• 4(A): ITC Available (Import of goods, import of services, RCM, all other ITC).
• 4(B): ITC Reversed (Rule 42/43 for exempt supplies).
• 4(D): Ineligible ITC under Section 17(5).

C. GSTR-2B Matching and Reconciliation

Under Section 16(2)(aa) of the CGST Act, a buyer can claim ITC only if the supplier has filed their GSTR-1 and the invoice appears in the buyer's auto-drafted GSTR-2B statement:

Tally's GSTR-2B Reconciliation Utility: Users import the GSTR-2B JSON file downloaded from the GST portal into Tally Prime.
Algorithmic Status Matching: Tally compares internal purchase registers against the portal data, categorizing invoices into: Reconciled (100% exact match), Mismatch in Tax/Amount, and Missing in GSTR-2B (supplier failed to file return).
Fiduciary Protection: Enables management to withhold payment of GST amounts to defaulting suppliers, eliminating tax loss risks.

6. Practical Empirical Case Studies

Case Study 3.1: Reconciling GSTR-2B Input Tax Credit Mismatch in an Auto Parts Distributorship

Enterprise Scenario: An automotive spare parts distributor in Kozhikode recorded ₹8,50,000 of input tax in its internal purchase register for August 2024. However, its portal GSTR-2B reflected only ₹7,15,000, creating an alarming discrepancy of ₹1,35,000.

Tally Prime Reconciliation Audit:

Imported the August GSTR-2B JSON file into Tally's GST reconciliation tool.
Discovered that a major brake component manufacturer (Invoice #412 for ₹1,18,000 including ₹18,000 GST) had erroneously uploaded the invoice under a different customer's GSTIN.
Identified two supplier invoices totaling ₹1,17,000 omitted because the vendors filed GSTR-1 after the 11th of the month.
Result: Tally prevented the company from claiming ₹1,35,000 of uncredited ITC in GSTR-3B, saving the enterprise from receiving a Section 73 statutory demand notice carrying 18% penal interest.

Case Study 3.2: Automated Reverse Charge (RCM) Accounting for Transport Logistics

Context: A spice exporting company in Kochi paid ₹1,50,000 to Goods Transport Agencies (GTA) for container transportation to Cochin Port.

Tally RCM Implementation: Passed purchase vouchers under RCM (5% GST). Tally booked the liability of ₹7,500 (₹3,750 CGST + ₹3,750 SGST) in Table 3.1(d) of GSTR-3B. The company remitted ₹7,500 via Challan PMT-06 and immediately claimed ₹7,500 under Table 4(A)(3) as eligible ITC in the same tax period, achieving 100% cash neutrality and statutory compliance.

7. Calicut University Academic Examination Bank

Exhaustively curated for Calicut University B.Com Semester VI Elective: Computer Applications — COM6EJ308(4): Computerized Accounting with Tally (CUFYUGP 2024 Regulations). Specially formatted for superior academic performance.

Question 1 [Part A - 2 Marks]GSTIN Structure

Deconstruct the 15-character alphanumeric structure of a Goods and Services Tax Identification Number (GSTIN).

Standard Academic Answer:
The 15-digit GSTIN is structured as: (1) First 2 digits: State Code (e.g., 32 for Kerala); (2) Next 10 characters: PAN of the legal entity; (3) 13th character: Entity registration number within state (e.g., 1); (4) 14th character: Default alphabet 'Z'; (5) 15th character: Checksum validation code.

Question 2 [Part A - 2 Marks]Tax Classification

Distinguish between 'Intra-State' and 'Inter-State' supplies under GST. What taxes apply to each?

Standard Academic Answer:
An Intra-State Supply occurs when the supplier's location and the Place of Supply (POS) are in the same state, attracting CGST + SGST equally. An Inter-State Supply occurs when the supplier and POS are in different states, attracting IGST (Integrated GST) in full.

Question 3 [Part A - 2 Marks]Reverse Charge

What is meant by the 'Reverse Charge Mechanism' (RCM) under GST?

Standard Academic Answer:
Under the Reverse Charge Mechanism (RCM), the statutory liability to pay GST to the government shifts from the supplier to the recipient of goods or services (e.g., procurement of GTA transport or legal services).

Question 4 [Part A - 2 Marks]Composition Scheme

State two major restrictions imposed on a business registered under the GST Composition Scheme.

Standard Academic Answer:
(1) Composition dealers cannot claim Input Tax Credit (ITC) on purchases; (2) They cannot collect GST from customers and cannot issue tax invoices (must issue a 'Bill of Supply').

Question 5 [Part A - 2 Marks]Blocked Credits

Name two goods or services on which Input Tax Credit is statutorily blocked under Section 17(5).

Standard Academic Answer:
(1) Motor vehicles for passenger transport with seating capacity ≤ 13 persons; (2) Food and beverages, outdoor catering, and health insurance (unless statutory employer obligations).

Question 6 [Part A - 2 Marks]Statutory Returns

Distinguish between 'GSTR-1' and 'GSTR-3B' in Tally Prime.

Standard Academic Answer:
GSTR-1 is a detailed statement of all outward sales supplies (invoice-level details for B2B, HSN summaries). GSTR-3B is a consolidated self-assessed summary return showing total sales turnover, eligible ITC, and net tax paid.

Question 7 [Part A - 2 Marks]Modern Features

What is an 'IRN' in Electronic Invoicing? What portal generates it?

Standard Academic Answer:
IRN stands for Invoice Reference Number, a unique 64-character hash code generated by the government Invoice Registration Portal (IRP) upon validating an uploaded e-invoice payload.

Question 8 [Part B - 5 Marks]Tax Hierarchy

Explain the Five-Tier GST Rate Hierarchy in Tally Prime. Discuss how Tally resolves tax rates when defined at multiple levels.

Structured Model Answer:
The Five-Tier GST Rate Hierarchy:
Tally Prime resolves tax rates and HSN codes through a hierarchical inheritance structure:
1. Company Level (F11): Default master level. Applied when all business products share a single tax rate.
2. Stock Group Level: The standard setup for retail/wholesale. Grouping products (e.g., "Dairy" @ 5%, "Footwear" @ 12%) cascades down to all child items.
3. Stock Item Level: Overrides Stock Group rates when specific items carry exceptional rates or distinct 8-digit HSN codes.
4. Ledger Level: Applied to service expense ledgers (e.g., Audit Fees assigned 18%) or dedicated tax sales ledgers.
5. Voucher Level: Live override during voucher entry via F12 configuration; takes ultimate precedence.
Resolution Rule: Tally always searches from the bottom tier up: Voucher → Ledger → Item → Group → Company. The lowest specific level defined overrides all higher global levels.

Question 9 [Part B - 5 Marks]ITC Utilization

Detail the statutory rules governing the set-off and utilization of Input Tax Credit (IGST, CGST, SGST) under Section 49 of the CGST Act.

Structured Model Answer:
Under Section 49, 49A, and 49B of the CGST Act, ITC must be offset against output tax liabilities in a strict statutory sequence:
1. Mandatory Exhaustion of IGST Credit:
Available IGST credit must be completely utilized 100% before any CGST or SGST credit can be touched. It is set off against Output IGST first; any remaining balance can be set off against Output CGST and Output SGST in any proportion chosen by the taxpayer.
2. Utilization of CGST Credit:
CGST credit can be set off against Output CGST first, and any surplus balance can be applied to Output IGST.
3. Utilization of SGST Credit:
SGST credit can be set off against Output SGST first, and any surplus balance can be applied to Output IGST.
Critical Cross-Set-off Prohibition: CGST credit can NEVER be used to pay Output SGST, and SGST credit can NEVER be used to pay Output CGST.

Question 10 [Part B - 5 Marks]GSTR-2B Matching

Explain the significance of GSTR-2B reconciliation in Tally Prime. How does Tally assist an enterprise in safeguarding Input Tax Credit?

Structured Model Answer:
Significance of GSTR-2B:
GSTR-2B is a static, auto-drafted ITC statement generated on the 14th of each month reflecting invoices filed by suppliers. Under Section 16(2)(aa), claiming ITC on an invoice not appearing in GSTR-2B is illegal and attracts demand notices with 18% interest and penalties.
Tally Prime Reconciliation Safeguards:
1. Direct JSON Import: The accountant imports the GSTR-2B JSON statement directly into Tally Prime.
2. Automated Status Tagging: Tally matches invoice numbers, dates, and tax values, sorting bills into: Reconciled, Mismatched in Values, and Available in Books but Missing in GSTR-2B.
3. Vendor Payment Withholding: Generates automated vendor discrepancy lists, allowing the accounts department to withhold the GST component from defaulting suppliers until they file their returns, safeguarding enterprise cash flow.

Question 11 [Part C - 10 Marks]Comprehensive GST Accounting Essay

Critically examine the operational implementation of Goods and Services Tax (GST) in Tally Prime. Discuss the end-to-end accounting workflow spanning master configuration, intra-state and inter-state invoicing, RCM accounting, GSTR-1 and GSTR-3B return generation, and modern e-invoicing compliance.

Structured Comprehensive Essay Framework:
1. Introduction & The Architecture of Digital Taxation:
The introduction of GST transformed Indian commerce into a data-driven, technology-linked indirect tax ecosystem. Tally Prime serves as a certified Application Service Provider (ASP) platform, automating the complete indirect tax lifecycle for commercial enterprises.
2. Master Setup & Classification Foundations:
• Configuring 15-digit GSTINs, assigning HSN/SAC codes, and creating dedicated tax ledgers (CGST, SGST, IGST) under Duties & Taxes.
• Implementing the 5-tier tax rate hierarchy ensuring error-free automated tax calculations across complex product inventories.
3. Transaction Invoicing & Place of Supply Routing:
• Tally validates customer state codes dynamically: routing intra-state sales to CGST+SGST and inter-state sales to IGST, eliminating human misallocations.
• Enforcing statutory invoice fields mandated by Rule 46 (consecutive numbering, HSN, POS).
4. Reverse Charge Mechanism (RCM) & Self-Invoicing:
• Recording GTA freight and legal services under RCM, auto-generating tax liability via statutory journal entries, and reclaiming equivalent ITC in cash flow neutrality.
5. Automated Statutory Return Filing (GSTR-1, GSTR-3B & E-Invoicing):
• Real-time population of GSTR-1 outward tables (B2B, B2C, HSN Summary) and export to JSON for direct portal upload.
• Automated GSTR-3B tax offset calculations strictly obeying Section 49 rules.
• Real-time API integration with the government Invoice Registration Portal (IRP), generating IRN hash codes and encrypted QR codes on invoices.
6. Conclusion:
Tally Prime eliminates tax filing stress, provides foolproof audit trails, and protects businesses from severe penalties and lost Input Tax Credits.

Question 12 [Part C - 15 Marks]Comprehensive GST Invoicing & Return Problem

(a) ABC Electronics, Kozhikode (GSTIN: 32AAACA1234F1Z1) executes the following transactions during September 2024:
1. Sold 10 Laptops @ ₹50,000 each plus 18% GST to Apex Infotech, Kochi (GSTIN: 32BBBCB5678G1Z2) on credit.
2. Sold 5 Laptops @ ₹52,000 each plus 18% GST to Metro Systems, Bengaluru, Karnataka (GSTIN: 29CCCC9999K1Z3) on credit.
3. Paid Goods Transport Agency (GTA) freight charges of ₹20,000 liable to 5% GST under Reverse Charge (RCM).
Show the exact Tally voucher entries, specifying Voucher Type, Ledger Debits/Credits, Tax Split (CGST/SGST/IGST), and GSTR-3B table placement.
(b) On 30th September 2024, ABC Electronics reports the following balances: Output CGST = ₹45,000; Output SGST = ₹45,000; Output IGST = ₹60,000; Input Tax Credit Available: Input IGST = ₹90,000; Input CGST = ₹20,000; Input SGST = ₹20,000. Calculate the statutory set-off under Section 49 and determine net tax payable or balance ITC carried forward.

Structured Model Answer:
Part (a): Invoicing Vouchers & Tax Entries:
1. Intra-State Sales to Apex Infotech, Kochi (Kerala → Kerala):
• Voucher Type: F8 (Sales Voucher) [Item Invoice Mode].
• Taxable Value = 10 × ₹50,000 = ₹5,00,000 • Tax: CGST @ 9% = ₹45,000; SGST @ 9% = ₹45,000.
• Accounting Entry:
Apex Infotech A/c Dr. ₹5,90,000
To Sales A/c Cr. ₹5,00,000
To Output CGST A/c Cr. ₹45,000
To Output SGST A/c Cr. ₹45,000
• Return Placement: GSTR-1 Table 4A (B2B); GSTR-3B Table 3.1(a).

2. Inter-State Sales to Metro Systems, Bengaluru (Kerala → Karnataka):
• Voucher Type: F8 (Sales Voucher) [Item Invoice Mode].
• Taxable Value = 5 × ₹52,000 = ₹2,60,000 • Tax: IGST @ 18% = ₹46,800.
• Accounting Entry:
Metro Systems A/c Dr. ₹3,06,800
To Sales A/c Cr. ₹2,60,000
To Output IGST A/c Cr. ₹46,800
• Return Placement: GSTR-1 Table 4A (B2B); GSTR-3B Table 3.1(a).

3. GTA Freight Under Reverse Charge (₹20,000 @ 5% GST):
• Voucher Type: F9 (Purchase) / F5 (Payment).
• GTA Expense A/c Dr. ₹20,000 • To Cash / Bank A/c Cr. ₹20,000.
• Tax Liability = 5% of ₹20,000 = ₹1,000 (CGST ₹500 + SGST ₹500).
• Statutory Adjustment Journal (F7):
Tax on RCM A/c Dr. ₹1,000 • To Output CGST (RCM) Cr. ₹500 • To Output SGST (RCM) Cr. ₹500.
• Return Placement: GSTR-3B Table 3.1(d) (Liability paid in cash) and Table 4(A)(3) (Eligible ITC).

Part (b): Statutory Tax Offset Calculation (Section 49):
• Total Output Tax Liabilities:
Output IGST = ₹60,000 • Output CGST = ₹45,000 • Output SGST = ₹45,000 • Total = ₹1,50,000.
• Step 1: Set off Input IGST (Available = ₹90,000):
1. Offset against Output IGST (₹60,000): Balance Output IGST becomes ₹0. Remaining Input IGST = ₹30,000.
2. Offset remaining Input IGST against Output CGST: Apply ₹30,000 against Output CGST (₹45,000). Remaining Output CGST = ₹15,000. Input IGST is now completely exhausted (₹0).
• Step 2: Set off Input CGST (Available = ₹20,000):
Apply Input CGST against remaining Output CGST (₹15,000): Output CGST becomes ₹0. Remaining unused Input CGST = ₹5,000.
• Step 3: Set off Input SGST (Available = ₹20,000):
Apply Input SGST against Output SGST (₹45,000): Output SGST becomes ₹45,000 - ₹20,000 = ₹25,000. Input SGST is completely exhausted.
• (Note: Surplus Input CGST of ₹5,000 cannot be set off against Output SGST).
• Final Settlement Verdict:
• Net Cash Tax Payable to Government: ₹25,000 (SGST paid via Challan PMT-06).
• Surplus ITC Carried Forward in Electronic Credit Ledger: ₹5,000 (CGST Credit).