Indirect Tax · Direct Tax · Chain Economics

GST Credit Chain Map

A nine-company service chain at 18% GST, from Company A through to Company I, with each leg priced between ₹25,00,000 and ₹27,00,000 a month. Every amount you enter is monthly — annual figures are derived at 12 months and shown separately for each company. The chain is closed — Company I supplies back to Company A — so credit circulates and no company sits at a dead end. Profit can only come from sales outside the loop, so each company also bills an external customer. GST settles monthly through GSTR-3B; income tax is computed on the annual profit.

Prepared by YASKAA Consultants

ITC: Sec. 16, CGST Act

Tax: AY 2026-27 rates

Supply chain map

each company shows monthly and annual side by side

Origin supplier Intermediary — charges output tax, avails ITC Chain end — tax rests here unless it has outside turnover Net GST cash to exchequer Credit balance / income tax

Supply leg register

monthly value, rate and place of supply are inputs — annual and tax columns are formulas

#	Supplier	Recipient	Monthly						Annual
#	Supplier	Recipient	Taxable value ₹	Rate %	Place of supply	CGST ₹	SGST / IGST ₹	GST ₹	Taxable value ₹	GST ₹

Entity-wise GST ledger

output tax − ITC availed = net cash payable through GSTR-3B

Entity	Position in chain	Monthly						Annual			Status
Entity	Position in chain	Chain outward ₹	Outside turnover ₹	Output tax ₹	ITC availed ₹	Net cash ₹	Credit pool ₹	Output tax ₹	ITC availed ₹	Net cash ₹	Status

Turnover, profit & income tax

monthly inputs · annual profit · income tax on the annual figure

Entity	Monthly				Annual					Income tax — annual
Entity	Chain turnover ₹	Outside turnover ₹	Total turnover ₹	Other cost ₹	Turnover ₹	Chain purchases ₹	Other cost ₹	GST borne ₹	Profit before tax ₹	Regime	Eff. rate %	Income tax ₹	Profit after tax ₹

Tie-out checks

must all read OK before this goes to the board

Basis & assumptions

Every input is monthly. Supply leg values, outside turnover and other cost are monthly amounts. Annual = monthly × months in year (set in the toolbar; default 12). Change the months figure for a part-year contract and every annual column, and the income tax, re-foot.
Credit cascade. Every company that makes an outward supply is assumed registered and eligible for full ITC under Sec. 16 of the CGST Act, so its GST cash outgo each month is tax on value addition only. GST is therefore not a P&L item for it.
Where the tax rests. A company with no outward supply at all — no chain leg out, no outside turnover — cannot use its credit. That ITC shows as a monthly credit pool and is charged to its P&L as GST borne on an annual basis.
Place of supply. Intra-State legs split the rate equally into CGST and SGST; Inter-State legs carry IGST at the full rate. CGST is rounded to the nearest paisa and SGST taken as the balance, so the split always foots.
Income tax is annual. Computed on annual accounting profit before tax with no book-tax differences and no brought-forward losses. Sec. 115BAA = 22% + 10% surcharge + 4% cess = 25.168%; Sec. 115BAB = 15% + 10% + 4% = 17.160%; the 25% / 30% domestic and Firm/LLP options apply the statutory surcharge slabs (7% above ₹1,00,00,000, 12% above ₹10,00,00,000; 12% above ₹1,00,00,000 for a firm) with marginal relief, plus 4% health & education cess. Tax rounds to the nearest ₹10 under Sec. 288B. A loss attracts nil tax and is flagged for carry-forward under Sec. 72.
Closed chain. Company I supplies back to Company A, so every company is an intermediary — none is a chain end and no credit is stranded. Aggregate turnover therefore counts the same underlying service nine times; only the value added outside the loop (Company I's outside turnover) is new economic value.
Why every company needs an outside sale. In a closed loop each company's revenue is the next one's cost, so across the loop turnover less inter-company purchases is exactly nil — aggregate profit can only ever equal minus the operating costs. Profit, and therefore income tax, must come from turnover billed outside the loop. Each company here bills 10% of its chain value to an external customer; adjust that figure and the Solve costs button re-sets each company's other cost to hit your target tax.
Saving your work. The board autosaves in this browser. Save writes a .json file of the whole model to your machine; Save as… writes it under a new name; Open reloads any such file. Ctrl/⌘+S saves, Ctrl/⌘+Shift+S is Save as. Use the .json to keep versions or hand the model to a colleague; the CSV export is for Excel, not for reloading here.
Not modelled. MAT / AMT (Sec. 115BAA opts out of Sec. 115JB), blocked credits under Sec. 17(5), reverse charge, TDS under Sec. 51 of the CGST Act or Chapter XVII-B of the Income-tax Act, advance tax instalments and Sec. 234B/C interest, seasonality within the year, transfer pricing on related-party legs, and cash-vs-credit ledger utilisation order.