Para 14.2.12 — CAM
Original Rule Text
14.2.12.2 REGULAR APPORTIONMENT AND SETTLEMENT OF IGST:
(a) Section 17 of IGST Act 2017 provides for the Apportionment of IGST collected to the Centre and to the State/Union Territory where the supply takes place. Section 49 (5) of CGST Act (And respective provision in SGST acts of the States) provides for the cross utilization of Input Tax credit (ITC) between CGST and IGST, SGST and IGST and between UTGST and IGST. Accordingly, Section 18 of IGST Act 2017 provides for the transfer of ITC between Centre and State/UT.
(b) The GST Settlement of Fund Rules 2017, provides the manner in which the IGST Settlement takes place between the Centre’s IGST and CGST and between the Centre and the States/UTs. The rules provide that based on the returns filed by the tax payers, the Place of Supply and the ITC utilized by the tax payers are determined. GSTN will provide details of IGST which is to be apportioned to the Centre and States/UTs and also the details of ITC cross utilized i.e. the ITC of IGST used for adjusting the tax liability of CGST/SGST/UTGST and the ITC of CGST/SGST/UTGST used for adjusting the tax liability of IGST.
(c) The details are provided by GSTN to the Centre (O/o Pr. CCA, CBIC) in the form of various types of GST Settlement Reports. Based on these reports, Department of Revenue (DoR) issues sanction. The Settlement Reports form the basis for net settlement to be made to the Centre (CGST) and the States/UTs. On receipt of sanction from DoR, the O/o Pr. CCA, CBIC issues IGA Advice to RBI for transfer of funds to/from the States/UTs and also for making book adjustment between the IGST and CGST for the Centre.
14.2.12.3 ADVANCE SETTLEMENT FROM IGST: Rule 11(3) of GST Settlement of Fund Rules 2018(as amended by Gazette Notification No GSR 524 (E) dated 04.06.2018 of the Department of Revenue) provides that:
“at any point of time in any particular financial year, the Central Government may, on the recommendation of the Goods and Service tax council, provisionally settle any sum of integrated goods and services tax collected in that particular financial year which has not been settled so far which will be adjusted in the subsequent month(s)/year(s), based on the returns filed by the taxpayers”.
According to the above amendment, the Centre can settle/apportion any unsettled amount of IGST as deemed necessary in equal share (after giving due provisions for future settlement and refunds) to the Centre and State/UT after the approval of GST Council.
14.2.12.4 RECOVERY OF ADVANCE SETTLEMENT OF IGST:
What This Means
IGST collected on inter-state supplies must be apportioned between Centre and States based on the destination of supply and input tax credit cross-utilization. GSTN provides settlement reports showing how much IGST goes to CGST and to each State/UT. The Department of Revenue issues sanctions, and Pr. CCA CBIC issues Inter-Governmental Adjustment Advices to RBI for fund transfers. Additionally, unsettled IGST can be provisionally settled 50:50 between Centre and States with GST Council approval, and recovered later if there is a shortfall.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1IGST is apportioned to Centre (CGST) and destination State/UT based on returns filed by taxpayers
- 2GSTN provides settlement reports; DoR issues sanction; Pr. CCA CBIC issues IGA Advice to RBI
- 3Cross-utilization of ITC between CGST-IGST and SGST-IGST is accounted for in settlement
- 4Advance settlement of unsettled IGST possible with GST Council recommendation — split 50:50 between Centre and States
- 5Recovery of advance settlement is proportional to regular settlement ratios when IGST shortfall occurs
Practical Example
In a given month, Rs 50,000 crore of IGST is collected. Based on GSTR returns, GSTN determines that Rs 20,000 crore should go to CGST and Rs 30,000 crore should be distributed across various States/UTs based on destination of supply. After input tax credit adjustments, the net settlement figures are calculated. DoR sanctions the settlement, and Pr. CCA CBIC issues IGA Advices to RBI to transfer funds to each State/UT. At year-end, Rs 5,000 crore remains unsettled, which the GST Council recommends splitting equally — Rs 2,500 crore to Centre and Rs 2,500 crore to States.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
How is the advance IGST settlement recovered?▼
What role does GSTN play in IGST settlement?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.