IndiaAudit Lens

Section 53 of the CGST Act, 2017

From the IndiaAuditLens Law Library

GST›CGST Act, 2017›Chapter X, Payment of Tax

At a glance

Bars, duties and time limits

53For central credit used towards integrated tax under section 49(5), reflected in a valid section 39(1) return, central collections reduce by that amount and the Central Government must transfer an equal amount to the integrated tax account in the prescribed manner and time.

Procedure, powers and definitions

53The law does not settle what follows when utilisation appears in a return that is invalid because self-assessed tax remains partly unpaid.

Section 53 links central-credit utilisation for integrated tax to a transfer between Government tax accounts. The utilisation must follow section 49(5) and appear in a valid section 39(1) return. Central tax collections are reduced by the credit used, with an equal transfer to the integrated tax account in the prescribed manner and time. The section commenced on 1 July 2017.^[1]

Quick facts

Section 53, CGST Act, 2017

Transfer of input tax credit

Provision
Act	Central Goods and Services Tax Act, 2017
Chapter	X, Payment of Tax
Section title	Transfer of input tax credit
In force from	1 July 2017^[1]
Amendments
Last amendment	1 July 2017: brought the section into force (none — a commencement note, not an amendment)
Amendments	1 footnote in the CBIC text (table)
Related provisions
Rules	Rule 3, Rule 5, Rule 11 of the GST Settlement of Funds Rules, 2017
Sections	2, 39, 49
Other	Section 18 of the IGST Act, 2017
Structure the opening words of section 53 with sub-section (5) of section 49The utilisation the section turns on the words "as reflected in the valid return furnished under sub-section (1) of section 39", with clause (117) of section 2The valid return that reflects the utilisation the operative words of section 53The reduction and the transfer the closing words "in such manner and within such time as may be prescribed"The manner and the time prescribed
Source
Law text	CBIC tax information portal, served on 17 September 2026^[1]
Questions reviewed	Prashant Prakash, 22 September 2026

Text

The text below is the section as served by the CBIC tax information portal on 17 September 2026, with the portal's own amendment footnote markers (shown as small numerals before a bracket) and its footnotes.^[1] The Act as published in the Gazette of India is the legal source.

Section 53, verbatim (show)

* Section 53. Transfer of input tax credit.-

On utilisation of input tax credit availed under this Act 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, as reflected in the valid return furnished under sub-section (1) of section 39, the amount collected as central 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 central tax account to the integrated tax account in such manner and within such time as may be prescribed.

*Enforced w.e.f. 1st July, 2017.

Questions to answer on the file

Questions a reviewer answers from the engagement file, grouped by the part of the section they come from. They describe what the section asks; they do not decide it.

Scope the section as a whole

Questions to answer on the file1 question

Which credit was utilised towards which tax in the utilisation?

Ticks stay in this browser only.

The utilisation the section turns on the opening words of section 53 with sub-section (5) of section 49

Questions to answer on the file5 questions

Was input tax credit availed under this Act utilised in the tax period?
Was that credit utilised for payment of tax dues under the Integrated Goods and Services Tax Act?
Was the credit of central tax first utilised towards payment of central tax, with only the amount remaining utilised towards integrated tax?
Was any part of the credit of central tax utilised towards payment of State tax or Union territory tax?
What amount of input tax credit availed under this Act was utilised towards tax dues under the Integrated Goods and Services Tax Act in the period?

Ticks stay in this browser only.

The valid return that reflects the utilisation the words "as reflected in the valid return furnished under sub-section (1) of section 39", with clause (117) of section 2

Questions to answer on the file3 questions

Has a return under sub-section (1) of section 39 been furnished for the tax period in which the credit was utilised?
If so: has the self-assessed tax shown in that return been paid in full?
If question 1 is answered yes: does that return show the credit as utilised towards tax dues under the Integrated Goods and Services Tax Act?

Ticks stay in this browser only.

The reduction and the transfer the operative words of section 53

Questions to answer on the file3 questions

By what amount does the amount collected as central tax stand reduced?
Has the transfer from the central tax account to the integrated tax account been made for the period?
What amount does the settlement report for the month show as transferred between Centre (Integrated Tax) and Centre (Central Tax) on account of cross-utilisation of credit, for all registered persons in the State together?

Ticks stay in this browser only.

The manner and the time prescribed the closing words "in such manner and within such time as may be prescribed"

Questions to answer on the file2 questions

Were rules prescribing the manner and the time of the settlement in force for the period?
Was the settlement report for the month transmitted by the common portal by the date those rules set?

Ticks stay in this browser only.

Amendment history

The CBIC text carries 1 footnote. The table gives each in the source's own terms. Effective dates are as the footnotes state them.^[1]

Amendments to section 53 as footnoted in the CBIC text
Note	Change	Instrument	Effective from
	brought the section into force	none — a commencement note, not an amendment	1 July 2017

Provisions connected to Section 53
Provision	Connection	Words that tie them
Section 49	this provision requires Section 49 sub-section (5)	53 "in accordance with the provisions of sub-section (5) of section 49"
Section 39	this provision requires Section 39 sub-section (1)	53 "as reflected in the valid return furnished under sub-section (1) of section 39"
Section 2	this provision defined by Section 2 clause (117)	2(117) "valid return means a return furnished under sub-section (1) of section 39 on which self-assessed tax has been paid in full"
Rule 5 of the GST Settlement of Funds Rules, 2017	this provision prescribed by Rule 5 of the GST Settlement of Funds Rules, 2017	53 "in such manner and within such time as may be prescribed"; rule 5(a)(i) "on account of cross-utilisation of credit as provided for in section 53 of the Central Goods and Services Tax Act, 2017"
Rule 3 of the GST Settlement of Funds Rules, 2017	this provision prescribed by Rule 3 of the GST Settlement of Funds Rules, 2017	rule 3 "shall transmit reports electronically to the Authorities by the 25th of the month in which Goods and Services Tax returns are furnished"
Rule 11 of the GST Settlement of Funds Rules, 2017	this provision prescribed by Rule 11 of the GST Settlement of Funds Rules, 2017	rule 11(1) "calculate the net payment to be made from the Integrated Goods and Services Tax account to each State or vice versa"
Section 18 of the IGST Act, 2017	this provision same as Section 18 of the IGST Act, 2017, running in the opposite direction	rule 5(a)(i) "as provided for in section 53 of the Central Goods and Services Tax Act, 2017 and section 18 of the Integrated Goods and Services Tax Act, 2017"

Circulars and notifications

No circular or notification in the CBIC repository is recorded as citing this section.

Unsettled questions

The words of section 53 do not answer this question. Where one decides a matter on the file, the answer depends on the position taken on it.

What follows where the utilisation is reflected in a return furnished under sub-section (1) of section 39 on which the self-assessed tax has not been paid in full, so that it is not a valid return? The section conditions the reduction and the transfer on the valid return and says nothing about the other case.

See also

Section 49 of the CGST Act, 2017: payment of tax, interest, penalty and other amounts
Section 39 of the CGST Act, 2017: furnishing of returns
Section 18 of the IGST Act, 2017: transfer of input tax credit

References

Central Board of Indirect Taxes and Customs. "Section 53. Transfer of input tax credit". Central Goods and Services Tax Act, 2017, CBIC tax information portal, with amendment footnotes 1 to 1. Retrieved 17 September 2026.

External links

CGST Act, 2017, Section 53 on the CBIC tax information portal