CLARIFICATION TO DEAL WITH ITC MISMATCH BETWEEN GSTR- 3B VS. GSTR-2A FOR F.Y. 2017-18 AND 2018-19
Circular 183/15/2022-GST is issued by the Central Board of Indirect Taxes and Customs (CBIC) to provide clarification on the input tax credit (ITC) mismatch between GSTR-3B and GSTR-2A for the financial years 2017-18 and 2018-19. Type of Cases due to which the supplies made in the said tax period do not get reflected in FORM GSTR-2A of the recipients is given in the circular. Also, procedure is given in the circular.
It may also be noted that the clarifications given hereunder are case specific and are applicable to the bonafide errors committed in reporting during FY 2017-18 and 2018-19. Further, these guidelines are clarificatory in nature and may be applied as per the actual facts and circumstances of each case and shall not be used in the interpretation of the provisions of law.
These instructions will apply only to the ongoing proceedings in scrutiny/audit/ investigation, etc. for FY 2017-18 and 2018-19 and not to the completed proceedings. However, these instructions will apply in those cases for FY 2017-18 and 2018-19 where any adjudication or appeal proceedings are still pending.
NON-APPLICABILITY OF SECTION 17 FOR ITC AVAILED AS RECIPIENT OF DEEMED EXPORTS
The ITC availed by the recipient of deemed export supplies would not be subjected to provisions of Section 17 of the CGST Act, 2017. ITC availed by the recipient of deemed export supply for claiming refund of tax paid on supplies regarded as deemed exports is not to be included in the “Net ITC” for computation of refund of unutilised ITC on account of zero-rated supplies under rule 89(4) or on account of inverted rated structure under rule 89(5) of the CGST Rules, 2017.
INTERPRETATION OF SECTION 17(5) EXPLANATION
Availment of ITC is not barred under sub-section (5) of section 17 of the CGST Act in case of leasing, other than leasing of motor vehicles, vessels and aircrafts.
https://www.cbic-gst.gov.in/pdf/Circular-172-04-2022-GST.pdf
CHANGES IN TABLE 4 of GSTR 3B Reporting of ITC
The taxpayers are advised to report their ITC availment, reversal of ITC and ineligible ITC correctly as per following format of Table 4of GSTR-3B at GST Portal for the GSTR-3B to be filed for the period August 2022 onwards.
- I. All non-reclaimable reversal of ITC needs to be reported in table 4(B)(1)
II. All reclaimable ITC reversals may be reported in table 4(B)(2). It should be noted that ITC reversed
under 4(B)(2) can be reclaimed in table 4(A)(5) at appropriate time and the break-up detail of such
reclaimed ITC should be provided in 4(D)(1) in the same return.
III. The ITC not-available mentioned in GSTR-2B of the taxpayer has to be reported in 4(D)(2) of table 4.
IV.Any ITC availed inadvertently in Table 4(A) in previous tax periods due to clerical mistakes or some
other inadvertent mistake maybe reversed in Table 4(B)2. - Corresponding changes in GSTR-2B and auto-population of GSTR-3B at present are under development and the taxpayer should reflect the changes required in GSTR-3B return by way of editing the pre-filled entries so as to correctly self-assess the GSTR-3B return. These changes would be available on GST Portal in due course of time.
- Taxpayers may also refer to CBIC Circular No. 170/02/2022-GST dated 06th July, 2022 for detailed
clarification on reporting of ITC availment, ITC reversal and Ineligible ITC in GSTR-3B. - Explore (cbic.gov.in)
PROPORTIONATE ITC ALLOWED IN CASE OF NON-PAYMENT OF CONSIDERATION
Reversal of ITC in case of non-payment of consideration in case it fails to make the payment to the supplier within 180 days. An anomaly was created whether full ITC was required to be reversed even in cases where partial amount was paid to the supplier The above anomaly has been resolved vide this amendment made effective retrospectively from 1st October, 2022 which requires the taxpayer to reverse only the proportionate ITC to the extent of the amount not paid to the supplier, whether wholly or partially.
RE-AVAILMENT OF ITC REVERSED IN CASE OF NON-PAYMENT OF CONSIDERATION
In case of supplier has not furnished Form GSTR-3B of the said tax period upto 30th September of the next financial year recipient is required to reverse ITC so availed in Form GSTR-3B to be filed upto 30th November of the next financial year. Else, such ITC needs to be reversed along with interest provided under Section 50
Recipient is allowed to re-avail the reversed ITC upon furnishing of Form GSTR-3B by the supplier subsequently.
The above rule allows the recipient to re-avail the reversed ITC without any time limit thereby giving relief to the recipients who had borne the incidence of tax but were not able to take ITC due to non-compliance by supplier within the prescribed time limit
TIME LIMIT OF AVAILING INPUT TAX CREDIT
ITC availment in monthly returns (not on provisional basis):
- The concept of provisional ITC is removed and ITC availed in monthly returns would be considered as final.
- ITC may have to be reversed along with interest (ITC is utilized), if not paid by supplier.
- ITC can be re-availed once the supplier pays the tax.
In GSTR-2B, if the ITC appears in Restricted category, the same cannot be availed by the registered person. This is a new condition which is to be satisfied for availment of input tax credit.
Earlier, the due date of availment of Input tax credit for any financial year was provided as the due date of furnishing of the return under section 39 for the month of September i.e. 20th October in case of monthly return filers and 22nd / 24th October in case of quarterly return filers. The due date of availing ITC is now extended upto 30th November.
This means that in case of forward charge, ITC can only be availed if it appears in GSTR-2B upto the month of October and not afterwards. This way matching can be completed in GSTR-3B for the month of October (or earlier month) which can in turn be filed upto 30th November.
RESTRICTIONS IN THE UTILIZATION OF BALANCE IN THE ELECTRONIC CREDIT LEDGER
Government may specify the maximum proportion of output tax liability which may be discharged through the electronic credit ledger for specified class of persons. The balance has to be paid through the electronic cash ledger. Currently, Rule 86B provides for such restriction of utilization from electronic credit ledger only upto 99% of output taxes for certain taxpayers. This may also be the enabling provisions for providing further restrictions in the utilization of balance in the electronic credit ledger. (Section 49(12) of the CGST Act 2017)
CLARIFICATION ON VARIOUS ISSUES RELATING TO APPLICABILITY OF DEMAND AND PENALTY PROVISIONS UNDER THE GST LAWIN RESPECT OF TRANSACTIONS INVOLVING FAKE INVOICES–
A number of cases have come to notice where the registered persons are found to be involved in issuing tax invoice, without actual supply of goods or services or both (hereinafter referred to as “fake invoices”), in order to enable the recipients of such invoices to avail and utilize input tax credit (hereinafter referred to as “ITC”) fraudulently.
Clarification on-demand and penalty in respect of fake GST invoices (Circular No. 171/03/2022-GST )
Disclaimer: This Article is only a knowledge sharing initiative and is based on the Relevant Provisions as applicable and as per the information existing at the time of the preparation. In no event RMPS & Co. or the Author or any other persons be liable for any direct and indirect result from this Article or any inadvertent omission of the provisions, update etc if any.
Published on: February 1, 2023