Consider the following statementsabout CGST and SGST wallets ndash 1 Credit of tax pa...........

Economic Affairs Tax System

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Consider the following statementsabout CGST and SGST wallets –

1. Credit of tax paid at every stage available as set-off for payment of tax at subsequent stage.

2. CGST and SGST wallets can be cross-used to offset input credits.

Which of the statement given above is / are correct?

1 only

2 only

Both 1& 2

Neither 1 nor 2

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Explanation:

- Statement 1: This is correct. Under the GST system, credit of tax paid on inputs at each stage of production is available as a set-off against the tax liability on output, ensuring tax is only on the value added at each stage.

- Statement 2: This is incorrect. CGST (Central Goods and Services Tax) and SGST (State Goods and Services Tax) wallets cannot be cross-utilized. Input tax credits are specific to the type of GST and cannot be used interchangeably. CGST credit can only be used against CGST and IGST liabilities, while SGST credit can be used against SGST and IGST liabilities.

- Correct Option: 1, 1 only