Section 49A makes IGST credit the first to be spent. Only when it is exhausted may CGST, SGST or UTGST credit be used — so that IGST collected by the Centre on inter-State supplies is set off before credits that belong to the Centre or a State alone.
Key points
- Under section 49A of the CGST Act, 2017, notwithstanding section 49, CGST, SGST or UTGST credit may be used to pay IGST, CGST, SGST or UTGST only after IGST credit has been fully used for that payment.
- Rule 88A (from 29.03.2019) lets IGST credit, after paying IGST, be applied to CGST and SGST/UTGST in any order and proportion, so that it is fully used.
The provisions
49AIGST credit first
Statutory text
Notwithstanding anything contained in section 49, the input tax credit on account of central tax, State tax or Union territory tax shall be utilised towards payment of integrated tax, central tax, State tax or Union territory tax, as the case may be, only after the input tax credit available on account of integrated tax has first been utilised fully towards such payment.]
1. Inserted by s. 21 of The Central Goods and Services Tax (Amendment) Act, 2018 (No. 31 of 2018) -Brought into force w.e.f. 01st February, 2019.
- Rule 88A, CGST Rules
- Circular 98/17/2019-GST, 23.04.2019
Statutory text as published on the CBIC tax information portal, as on 03.10.2026; the numbered notes record each amendment. Official source
Common questions
- Must IGST credit be used before CGST and SGST credit?
- Yes. Section 49A of the CGST Act requires IGST credit to be fully used first; under Rule 88A it may be applied to CGST and SGST in any order or proportion after paying IGST.
Commentary and case notes checked against the judgments and CBIC sources on 04.10.2026.
What it means
Inserted by the CGST (Amendment) Act, 2018 from 01.02.2019. As first applied, the portal used IGST credit against CGST before SGST, which could leave unused SGST credit while CGST was paid in cash. Rule 88A and Circular 98/17/2019-GST resolved this by allowing IGST credit to be split between CGST and SGST in any proportion, provided it is fully used. The resulting adjustments between governments are made under section 53 and section 18 of the IGST Act.