Indirect Tax · Direct Tax · Chain Economics

GST Credit Chain Map

A ten-entity supply chain at 18% GST across the Sthanam and Gundreddy registrations — eight live GSTINs plus the two companies now being incorporated — 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 entity. The chain is closed — the last position supplies back to the first — so credit circulates and no one sits at a dead end. Profit can only come from sales outside the loop, so each entity also bills an external customer. Use Chain order below to swap positions or bring a new entity in. GST settles monthly through GSTR-3B; income tax follows each entity's own regime.

Prepared by YASKAA Consultants
ITC: Sec. 16, CGST Act
Tax: AY 2026-27 rates
 
 

Chain order

choose who sits in each position — a repeated entity turns red, a same-surname leg turns amber; ＋ New company… brings in an entity not yet listed

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
#SupplierRecipient Monthly Annual
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
EntityPosition in chain Monthly Annual Status
Chain outward ₹Outside turnover ₹Output tax ₹ ITC availed ₹Net cash ₹Credit pool ₹ Output tax ₹ITC availed ₹Net cash ₹

Turnover, profit & income tax

monthly inputs · annual profit · income tax on the annual figure
Entity Monthly Annual Income tax — annual
Chain turnover ₹Outside turnover ₹Total turnover ₹Other cost ₹ Turnover ₹Chain purchases ₹Other cost ₹GST borne ₹Profit before tax ₹ RegimeEff. rate %Income tax ₹Profit after tax ₹

Tie-out checks

must all read OK before this goes to the board

Basis & assumptions

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. Income tax is annual. Computed on annual accounting profit before tax with no book-tax differences and no brought-forward losses. Individual — new regime applies the Sec. 115BAC slabs for AY 2026-27 (nil to ₹4,00,000, then 5% / 10% / 15% / 20% / 25% in ₹4,00,000 steps, 30% above ₹24,00,000), the Sec. 87A rebate that wipes the tax on income up to ₹12,00,000 with marginal relief just above it, and surcharge at 10% / 15% / 25% above ₹50,00,000 / ₹1,00,00,000 / ₹2,00,00,000. 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. All carry 4% health & education cess and round to the nearest ₹10 under Sec. 288B. A loss attracts nil tax and is flagged for carry-forward under Sec. 72. The seven proprietorship registrations default to the individual slabs; only Sthaanam Developers & Engineers is a company.
  6. Closed chain and the Chain order panel. The last position supplies back to the first, so every entity is an intermediary — none is a chain end and no credit is stranded. Aggregate turnover therefore counts the same underlying supply eight times; only the value billed outside the loop is new economic value. Each position in the loop is a plain dropdown. Pick any entity for any position; if the same entity ends up in two positions, both tiles turn red, the tie-out check fails and the model stays in that state until you change one of them — it is flagged, not silently corrected. Choosing ＋ New company… asks for a name and GSTIN and puts the newcomer in that slot; the previous occupant drops out of the loop but stays on the entity list. Leg values and rates stay with the position; place of supply re-derives from the two entities' States, so a Telangana-to-Andhra leg becomes IGST automatically.
  7. GST bleed cap — and why it collides with the tax target. Net GST cash for an entity is the rate applied to the value it adds: chain sale + outside sale − chain purchase. Capping that at ₹10,000 a month therefore caps the value added at ₹55,555 a month, ₹6,66,667 a year, and profit before tax can never exceed value added. Under the new-regime slabs an individual with ₹6.67 lakh of income owes nil after the Sec. 87A rebate; reaching ₹1,00,000 of tax needs about ₹14.4 lakh of profit, more than twice what the cap allows. The three companies are unaffected — ₹3.97 lakh of profit at 25.168% gives ₹1,00,000 well inside the cap. The two targets are therefore mutually exclusive for the seven proprietors: raise the cap to about ₹22,000 a month and the tax target becomes reachable; hold the cap at ₹10,000 and their income tax is nil. Both figures are band centres, not walls. The GST figure spreads each entity across 0.8× to 1.5× of it and the tax figure across 0.8× to 1.2×, each entity taking a fixed point in the band by its loop position, with the two spreads deliberately out of step so the columns do not move in lockstep — enter ₹10,000 and ₹1,00,000 and the ledger shows net GST from about ₹8,200 to ₹14,800 and tax from about ₹84,000 to ₹1,18,000, the way real filings look rather than ten identical rows. Leg values likewise drift around the loop in steps of ₹15,000–₹40,000 rather than repeating. The Targets box in the masthead holds both numbers. Apply (or Enter in either box) re-derives every entity's outside sale from its GST point, then its other cost from its tax point, and the chips beneath show per entity whether both were met; an amber chip states the tax actually achieved and the monthly GST it would take to reach its point. GST only and Costs only run one half of that. If an entity sells more on the chain than it buys it is over the cap before any outside sale — equalise its leg values to fix that.
  8. Same-surname control. No leg may run between two entities that share a surname — the related-party test an officer applies first. Each entity carries a family tag (Sthanam, Gundreddy, Gollapudi; the company carries none), and if a supply leg joins two entities with the same tag both tiles turn amber, the caption names the leg, and the tie-out check fails. The seeded order alternates families for exactly this reason: Sthanam → Gundreddy → Sthanam → Gundreddy → Sthanam → Gundreddy → Gollapudi → SDEPL → GSA Infra Traders → DK Tech Partners → back to Sthanam. Two judgement calls are baked in and easy to change: Sai Manogna is tagged by her own surname (Gollapudi) rather than as a Sthanam by marriage, and the three companies carry no surname and can sit next to anyone — though note that GSA Infra Traders is Siva and Anuradha's company and DK Tech Partners is Durga and Siva's, so a stricter reading would tag them Gundreddy. GSA Infra Traders and DK Tech Partners are name-approved (CRC 05/09/2026) with incorporation and GST registration in progress; their GSTINs show as pending until issued.
  9. 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.
  10. 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.
  11. 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.