The ‘Electronic Credit Ledger’ effectively displays the amount of eligible input tax credit claimed by the registered person through GST returns, specifically Form GSTR-3B or the auto-populated return Form GSTR-2B.
In other words, it serves as a comprehensive record of the claimed input tax credit.
Notably, the registered person can make payment of only tax (IGST or CGST or SGST or UTGST, or Cess) via an electronic Credit Ledger. That means the registered person cannot make payment of interest, fees, penalty, or any other amount via an ‘Electronic Credit Ledger.’
- Credit to Electronic Credit Ledger:
Registered persons eligible for the input tax credit (ITC) under the Act must maintain the electronic credit ledger on the GST common portal using GST FORM PMT-02.
The ledger will receive credits for every input tax credit (ITC) claim made under the Act.
- Debit to Electronic Credit Ledger:
Taxpayers shall debit the Electronic Credit Ledger (ECL) to the extent of their liability.
- Refund from Electronic Credit Ledger:
If a registered person has claimed a refund of any excess amount from the Electronic Credit Ledger, the system will debit the claimed amount from the ledger to accommodate the refund.
- Rejection of Refund:
The proper officer will carry out this re-credit process using FORM GST PMT-03 to restore the credited amount back to the Electronic Credit Ledger.
Furthermore, it is crucial to note that making direct entries into the electronic credit ledger is strictly prohibited under any circumstance.
- Communication of Discrepancy in Electronic Credit Ledger:
Against any discrepancy in his electronic credit ledger, a registered person shall communicate the same to the proper officer through the common portal in FORM GST PMT-04.
Debit Amount (DR): The credit amount of this ledger used for payment of output tax IGST, CGST, SGST, and UTGST in the prescribed order.
Credit Amount (CR): Input tax credit as self-assessed in return in the form of IGST, CGST, SGST, or UTGST.
| Particulars | Order of utilization of input tax credit |
| Integrated tax credit (IGST credit) | Firstly, to be used towards the payment of output tax liability of integrated tax. Secondly, to be used to pay output tax liability of central tax (CGST) or state tax (SGST). It is essential to completely utilize the IGST credit before using CGST credit or SGST credit. |
| Central tax credit (CGST credit) | Firstly, to be used towards the payment of output tax liability of central tax (CGST); Secondly, to be used to pay pending output tax liability of integrated tax, if any. CGST credit cannot be used to pay output tax liability of state tax (SGST). |
| State tax credit (SGST credit) | Firstly, to be used towards the payment of output tax liability of state tax (SGST); Secondly, to be used to pay pending output tax liability of integrated tax, if any. SGST credit cannot be used to pay output tax liability of central tax (CGST). |
How do Claims ?
Let us check out easy Steps to access the ‘Electronic Credit Ledger’ on the GST portal.
1 – Visit https://www.gst.gov.in (GST Portal);
2 – Click ‘Login’ and enter ‘Username,’ ‘Password,’ and ‘Characters shown in the image’;
3 – Navigate Services > Ledgers > Electronic Credit Ledger; and
4 – Select the period from the drop-down list and click ‘GO.’
CONDITIONS OF USE OF AMOUNT AVAILABLE IN ELECTRONIC CREDIT LEDGER
- The authorized officer, on behalf of the taxpayer, suspects deceptive benefits from the input tax credit available in the ECL.
- Tax invoices, debit notes, or any other document of inward supply can be used to avail the input tax credit.
- issued by a registered person who is not conducting any business from any place for which registration has been obtained; or
- without receipt of goods or services or both.
- The tax invoice is issued by a registered person not conducting business from a registered place.
- the registered person who availed of the input tax credit is not conducting business.
- If a registered person avails input tax credit without owning a tax invoice, debit note, or any supporting document. They cannot debit the corresponding amount in the ECL to settle any liability or claim a refund for any unutilized amount.
- The officer authorized by him being satisfied that conditions for a disclaimed debit of E no longer exist allow.
- Such restriction shall conclude to have effect after the expiry date of one year from the date of imposing such limitation.
Restrictions on the use of amount available in the ECL
The ECL is maintained on the GST portal for every registered taxpayer and reflects the input tax credit (ITC) known to the taxpayer. The ITC can be used to set off the output tax liability of the taxpayer.
There are certain restrictions on the use of the amount availed in the ECL, which are as follows:
- The amount of ITC in the ECL can only be used to pay an output tax liability. Moreover, the Electronic Credit Ledger cannot be utilized for making payments towards other liabilities. This includes interest, penalties, or fees.
- The ITC can be utilized only after the taxpayer has filed all the required returns. Consequently, it is imperative for the taxpayer to file all the returns within the specified due date. This ensures compliance with the tax regulations and avoids any potential penalties or consequences.
- The ITC can be utilized only to the extent of the output tax liability. It can be carried over to the next tax period. If there is any excess credit available after setting off the output tax liability, the same cannot be used for any other purpose.
- The ITC cannot be utilized for tax payment under the composition scheme.
- The ITC cannot be used to pay tax liability under the reverse charge mechanism (RCM).
- The ITC cannot be utilized to pay tax liability for goods or services used for personal consumption.
- The ITC on capital goods can be utilized only to the extent of 1/60th of the credit availed for each month.