Q.A trader's output tax liability for a month is CGST ₹9,000 and SGST ₹9,000 (no inter-state sales this month). Input tax credit available is CGST ₹4,000, SGST ₹4,000 and IGST ₹6,000 (from an inter-state purchase; there is no IGST output liability). Compute the net GST payable in cash, showing the set-off.

Since there is no IGST output liability this month, the entire IGST input credit is available to bridge whatever CGST or SGST shortfall remains after same-head set-off. …

Step 1 — Set off CGST against CGST. Input CGST ₹4,000 is applied against Output CGST ₹9,000, leaving a CGST shortfall of 9,000 − 4,000 = ₹5,000.

Step 2 — Set off SGST against SGST. Input SGST ₹4,000 is applied against Output SGST ₹9,000, leaving an SGST shortfall of 9,000 − 4,000 = ₹5,000.

Step 3 — Determine available IGST credit. There is no IGST output liability this month, so the entire Input IGST of ₹6,000 remains fully available to bridge shortfalls in CGST or SGST.

Step 4 — Apply the IGST credit to the CGST shortfall first. Applying ₹5,000 of the ₹6,000 IGST credit to the CGST shortfall of ₹5,000 clears it fully, leaving IGST credit of 6,000 − 5,000 = ₹1,000 still available.

Step 5 — Apply the remaining IGST credit to the SGST shortfall. The remaining ₹1,000 IGST credit is applied to the SGST shortfall of ₹5,000, reducing it to 5,000 − 1,000 = ₹4,000, which now has no further credit available to cover it.

Step 6 — State the final cash payment. CGST liability = nil; SGST liability = ₹4,000 (unmet); this ₹4,000 must be paid in cash. …

Set off same-head credit first, then use any IGST credit not needed for its own liability to cover CGST/SGST shortfalls in sequence, and confirm the …

A common mistake is assuming IGST credit can only be used for IGST liability and ignoring its cross-utilisation role, which would wrongly inflate the cash payable to ₹10,000 (the full CGST+SGST shortfall) instead of ₹4,000. Another is applying the IGST credit to SGST before CGST (or splitting it evenly) without a stated basis — the …