In a circular, the CBIC has said that the amount deducted/collected as TDS/TCS by deductors under the provisions of section 51/52 of the CGST Act and credited to the electronic cash ledger of the taxpayer, is equivalent to cash deposited in the electronic cash ledger.
Thus, it is not mandatory for taxpayers to utilise the TDS/TCS amount credited to his electronic cash ledger only for the purpose for discharging tax liability.
The board said that a GST registered person is at full liberty to discharge his tax liability in respect of the supplies made by him during a tax period, either through debit in electronic credit ledger or through debit in electronic cash ledger, as per his choice and availability of balance in the said ledgers.
The circular added that any amount, which remains unutilised in electronic cash ledger, after discharge of tax dues and other dues payable under CGST Act can be refunded to the registered person as excess balance.
Thus, the money refunded to taxpayers would not be blocked for use only in discharging future and other tax liabilities but can be used for furthering the business.
The clarification of the board is expected to provide big relief to businesses as it would unlock a lot of funds for them for use in furthering business objectives. Earlier, refund money got blocked in the electronic cash ledgers of taxpayers that could only be used for settling tax dues.