Attention: Restrictions on availment of ITC as per GSTR-2A from 1st January 2022 .

Arjuna (Fictional Character): Krishna, what is the new amendment that has been notified by the CBIC in respect of claim of ITC which will be applicable from 1st Jan 2022?

Krishna (Fictional Character): Arjuna, Earlier taxpayer had been allowed to claim ITC based on the 4 conditions mentioned in section 16. However, in section 16 of the Central Goods and Services Tax Act, in sub-section (2), after clause (a), CBIC has inserted 5th condition via clause (aa) namely, “the details of the invoice or debit note referred to in clause (a) has been furnished by the supplier in the statement of outward supplies and such details have been communicated to the recipient of such invoice or debit note in the manner specified under section 37”. Now, this provision will be applicable from 1st Jan 2022, and 100 percent invoice matching with GSTR 2A will come into place.

Arjuna (Fictional Character): Krishna, on which basis taxpayer used to claim ITC till date?

Krishna (Fictional Character): Arjuna, till date taxpayer used to claim ITC based on either of the following two methods.

Method 1: Claim ITC in return for that period to the extent of appearing in GSTR 2A.

Method 2: Claim Full ITC based on amount appearing in the purchase invoice booked.

Now Taxpayer will be allowed to take ITC only to the extent of amount appearing in GSTR 2A.

Arjuna (Fictional Character): Krishna, what are the reasons due to which ITC of the genuine taxpayer can be disallowed because of insertion of above new clause?

Krishna (Fictional Character): Arjuna, Following are the reasons due to which ITC of the genuine taxpayer can be disallowed:

1) Your supplier has not filed GSTR 1 within due date.

2) Your supplier has filed GSTR 1 but mentioned wrong GST number.

3) Your supplier has filed GSTR 1 but mentioned transaction as B2C instead of B2B.

4) Many more reasons which are not in control of taxpayer.

Arjuna (Fictional Character): Krishna, what action department can take if any taxpayer claims ITC in excess of appearing in GSTR 2A?

Krishna (Fictional Character): Arjuna, the GST department has already started issuing notice in the Form of ASMT 10 for FY 2017-18 and FY 2018-19 against the dealer who has claimed excess ITC than that appearing in GSTR 2A / Table 8 of GSTR 9. Such notices have been sent to all dealers by mail and are also available on the GST portal. The notice needs to be replied, otherwise the GST department can recover the tax along with interest and penalty.

Arjuna (Fictional Character): Krishna, what care should be taken by the taxpayer?

Krishna (Fictional Character): Arjuna, now it is the responsibility of every taxpayer to check whether supplier is filling GSTR 1 accurately and in timely manner and after auto population of GSTR 2A of the following month the taxpayer shall reconcile ITC on purchases accounted in books with ITC reflected in GSTR 2A. If the same is not reflected in GSTR-2A, then a follow up must be taken by the taxpayer with the supplier so that the same can be availed by the taxpayer.

Author Bio

Qualification: CA in Practice
Company: R.B. Sharma and Co
Location: Aurangabad, Maharashtra, India
Member Since: 27 Jan 2018 | Total Posts: 359
1. Vice-Chairmen of WIRC of ICAI for the year 2015-2021. 2. Youngest Chairman of Aurangabad Branch of WIRC of ICAI in 2002. 3. Author of Popular Tax articles series based on Krishna and Arjuna conversation i.e “KARNITI” published in Lokmat on every Monday. Till date 335+ weekly articles ha View Full Profile

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