Definition
Electronic Credit Ledger
The electronic credit ledger is the account on the GST portal where a taxpayer's available input tax credit is recorded and from which it can be used to pay tax.
On the GST portal, a registered taxpayer maintains an electronic credit ledger that accumulates eligible input tax credit, and an electronic cash ledger that holds money deposited for tax, interest and penalties. Output tax liability is settled by drawing from these ledgers in a prescribed order.
Credit in this ledger can generally be used only to pay tax, not interest or penalty, which must come from cash. Rules also restrict how IGST, CGST and SGST credits can be cross-utilised, making correct ledger management essential to compliance.
Related terms
- GSTR-2BGSTR-2B is an auto-generated, static statement that tells a buyer the input tax credit available based on suppliers' filed returns.
- GSTR-3BGSTR-3B is the monthly or quarterly summary GST return through which a taxpayer declares net tax liability and pays the tax due.
- Input Tax Credit (ITC)Input Tax Credit lets a GST-registered business offset the tax it has already paid on purchases against the GST it collects on sales, so tax is levied only on value added.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.