Union Territory Goods and Services Tax Act, 2017 | Chapter IV - Payment of Tax

Section 10 of the UTGST Act, 2017 - Transfer of Input Tax Credit

Section 10 governs the transfer of amounts between the Union territory tax account and the integrated tax account when eligible input tax credit (ITC) of Union territory GST (UTGST) is used to discharge integrated GST (IGST) liability.

Section 10 - Statutory provision

On utilisation of input tax credit of Union territory tax for payment of tax dues under the Integrated Goods and Services Tax Act in accordance with the provisions of sub-section (5) of section 49 of the Central Goods and Services Tax Act, as reflected in the valid return furnished under sub-section (1) of section 39 of the Central Goods and Services Tax Act, the amount collected as Union territory tax shall stand reduced by an amount equal to such credit so utilised and the Central Government shall transfer an amount equal to the amount so reduced from the Union territory tax account to the integrated tax account in such manner and within such time as may be prescribed.

Meaning and application of Section 10

1. When the provision applies

Section 10 operates when a registered person uses available UTGST input tax credit to pay an IGST tax liability in accordance with the applicable credit-utilisation provisions. It concerns credit actually utilised, not merely a credit balance shown in the electronic credit ledger.

2. Link with the valid return

The utilisation must be reflected in the valid return furnished under Section 39(1) of the Central Goods and Services Tax Act, 2017. Section 39 deals with furnishing returns; the return provides the statutory reporting basis for the corresponding transfer between government tax accounts.

3. Reduction of UTGST collections

The amount collected as Union territory tax is reduced by the amount of UTGST credit used for IGST dues. The Central Government must transfer an equal amount from the Union territory tax account to the integrated tax account, following the prescribed procedure and timeline.

4. Effect on the taxpayer

Section 10 is principally a government accounting and settlement mechanism. It does not, by itself, create fresh ITC or permit unrestricted cross-utilisation. Eligibility, available balances and the legally prescribed order of utilisation continue to apply.

Illustration of the transfer

Suppose a registered person validly utilises Rs. 12,000 of UTGST input tax credit to discharge IGST output tax. Subject to the applicable utilisation rules and reporting requirements, the Union territory tax collection is reduced by Rs. 12,000 and an equal amount is transferred to the integrated tax account. This is an illustration of the statutory settlement, not an additional tax payment by the registered person.

Section 9 of the UTGST Act addresses utilisation of credit for tax payment; it must be read with subsequent provisions including Sections 9A and 9B, which address priority of IGST credit and the prescribed order of utilisation. Section 49(5) of the CGST Act governs use of credit for specified tax liabilities, while Sections 49A and 49B and the applicable rules prescribe additional ordering requirements. Section 39(1) of the CGST Act concerns returns. Section 21 of the UTGST Act applies specified CGST provisions, with adaptations, to UTGST.

Important distinction: This provision deals with the transfer of tax amounts between government accounts following lawful ITC utilisation. It is different from the transfer of unutilised credit on business reorganisation or transfers between distinct registrations, which are governed by other provisions and rules.

Official legal sources

Consult the Union Territory Goods and Services Tax Act, 2017 (India Code), the CBIC GST legal information portal for the current CGST provisions and amendment history, and CBIC GST notifications and circulars for applicable rules, notifications and administrative clarifications. The text of Section 10 should be read together with current credit-utilisation requirements.

Reviewed: 6 October 2026. Statutory interpretation depends on amendments, applicable rules and notifications.