Introduction:
The 50th meeting of the GST Council was convened on July 11, 2023, under the chairmanship of Smt. Nirmala Sitharaman, the Union Finance & Corporate Affairs Minister. The Council discussed crucial recommendations to provide much-needed clarification on input tax credit (ITC) availment and utilisation. These recommendations aim to alleviate the burden on taxpayers and ensure compliance with GST regulations.
Recommendation 1: Verification of ITC in Cases of Variance between GSTR-3B and GSTR-2A
As per the Council’s recommendations in its 48th meeting, Circular No. 183/15/2022-GST was issued on December 27, 2022. This circular outlined the verification procedure for cases involving a difference in the input tax credit availed in FORM GSTR-3B and that available as per FORM GSTR-2A during the FY 2017-18 and 2018-19. To further assist taxpayers, the Council recommended the issuance of a new circular. This circular would provide a similar verification procedure for cases of variance between GSTR-3B and GSTR-2A during the period from April 1, 2019, to December 31, 2021.
Recommendation 2: Calculation of Interest Amount for Wrongly Availed and Utilised IGST Credit
The Council also recommended clarification on the calculation of interest payable under Section 50(3) of the CGST Act, 2017, in cases of wrongly availed and utilised IGST credit. The clarification emphasized that when IGST credit is wrongly availed, the balance of input tax credit (ITC) in the electronic credit ledger, comprising IGST, CGST, and SGST, must be considered while calculating the interest liability. This clarification aligns with Rule 88B of the CGST Rules, 2017.
Conclusion:
The recommendations put forth during the GST Council’s 50th meeting on July 11, 2023, bring much-needed clarity to taxpayers regarding the verification of ITC in cases of variance between GSTR-3B and GSTR-2A. The issuance of a new circular for the period from April 2019 to December 2021 will provide relief and ensure compliance. Furthermore, the clarification on the calculation of interest payable for wrongly availed and utilised IGST credit streamlines the process and helps taxpayers navigate the relevant provisions effectively.
By implementing these recommendations, the GST Council continues its commitment to fostering a transparent and efficient GST regime that supports businesses and taxpayers alike.
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