No More Unnecessary Cash Blockage in GST Payments | Feb 2026 Update

 Finally — No More Unnecessary Cash Blockage in GST Payments | Feb 2026 Update

One of the biggest pain points in filing GSTR-3B has been the practical restriction in ITC utilisation, despite flexibility being available under law.

Many taxpayers have faced this situation:

👉 Paying CGST in cash

👉 While sufficient credit was sitting in the IGST ledger

Now, the GST portal has streamlined Table 6.1 to allow true proportionate utilisation of IGST credit.

📘 Legal Position

As per Section 49 of the Central Goods and Services Tax Act read with Rule 88A:

• IGST credit must first be utilised towards IGST liability

• The balance IGST credit can be utilised towards CGST and SGST in any order and proportion

• CGST and SGST credits cannot be cross-utilised

While the law permitted flexibility, portal sequencing earlier limited practical optimisation.

Practical Illustration

🔺 Output Liability

CGST – ₹40,000

SGST – ₹40,000

🔺 Available ITC

IGST – ₹50,000

SGST – ₹30,000

CGST – ₹0

🔄 Optimal Utilisation Under New Portal Logic

• IGST → CGST = ₹40,000

• IGST → SGST = ₹10,000

• SGST → SGST = ₹30,000

✔ Total liability fully discharged

✔ Net cash payable = NIL

✔ No idle credit accumulation

 Additional System Enhancements

• Interest computation aligned more closely with net cash principles

• Automated late fee catch-up while filing GSTR-10

• Improved return validation controls

Why This Matters

For manufacturing, EPC, infra, and trading businesses, working capital efficiency directly impacts margins.

This update is not a new law — it is better system alignment with existing legal provisions — but practically, it delivers meaningful liquidity relief.

A small portal change.

A significant cash flow impact.