In the GST regime, quick reconciliation of details between what is purchased (by the purchaser) and what was sold (by the seller) is believed to be the foundation behind availing the benefits of ITC (Input Tax Credit).

According to some renowned tax experts, “The absence of a mechanism that would have enabled taxpayers to reconcile their invoices, may now lead to the loss of significant amount of Tax Credit”.

Under the ITC concept, the taxpayer (GST Registered person) is eligible to reduce his/her tax liability which has already been paid on inputs from tax payable on outward supplies. Thus, it is important to know about those specific issues that cause a number of companies to lose huge Tax Credit while filing their GST Returns.

LOST of ITC GST Return filing

1. Due date confusion:

Keeping in view the ease of taxpayers and to make the entire GST system more efficient and transparent, the Govt. introduced various kinds of GST Return Forms for different kinds of businesses. And, to avoid unnecessary penalty and further complications, each of these return forms needs to be filed on or before their respective due dates. And each of the return forms has a specific due date for filing. Thus, the most complicated issue comes up in connection with confusions caused by multiple Due dates.

It is important to take note that a taxpayer, as per the Central GST Act, can avail the benefits of Input Tax Credit in a Fiscal Year only up to the due date of filing returns for September or the annual return, whichever is earlier.
For general businesses (in normal circumstances), four types of GST Returns have been prescribed, i.e. GSTR-1 (for Sales), GSTR-2 (for Purchases), GSTR-3 (Monthly summary of both Inward and outward supply) and GSTR-9 (annual return).

But currently, GSTR-2 and GSTR-3 has not been brought in practice, instead GSTR-3B has been introduced as a monthly summary for both Inward and Outward supply. Thus, at present, in place of 37 Returns (i.e. 12 months X 3 monthly Returns = 36 + 1 annual return = 37 GST Returns), only 25 Returns are in practice (i.e. 12 monthly GSTR-1 Returns + 12 monthly GSTR-3B Returns = 24 + 1 GSTR-9 Return).

But, each GST Return has a specific due date and to remember and comply with all 25 due date liabilities is not an easy task and it usually becomes a troublesome matter to solve out smoothly for a number of taxpayers across the country. Additionally, it must be kept in mind that, failure to comply with any return liability attracts further complications and penalty.

2. The decline of Credit:

Due to various obstructions, the due date for filing GSTR 1 for July 2017-Sept was extended up to October 31st. The data in GSTR-1 can be seen by the purchaser on the GST portal in GSTR-2A—an auto-populated return form. This helps buyers in reconciling their purchase data with the data disclosed by their vendors/sellers.

The extension of due date for filing GSTR-1 means that taxpayers had to utilize the benefits of Input Tax Credit only by October 31st without having the benefit of reconciling their GSTR-1 with GSTR-2A (i.e. details of their purchases with the details of data uploaded by their vendors).

Such circumstances make way for critical issues while filing the Annual GST Return, i.e. GSTR-9, for which the prescribed due date is Dec 31st. This form picks up data from GSTR-2A. And suppose, if a taxpayer has credit worth ₹ 200 in his/her accounting books but GSTR-2A is reflecting only ₹ 160, then ₹ 40 worth of credit will lapse. Since this amount will be available as a gross number, the taxpayer won’t even know which vendor should be chased for this lapsed credit unless the taxpayer has completed its entire reconciliation adequately, line item or invoice-wise.

In big companies, the cases of mismatching in credits amounts range between 16 to 20 crore, and since they are deeply concerned with a number of small vendors who are not geared up properly and their GST filing records are extremely poor—both quantity and quality-wise.

If a taxpayer has received excess credit, he/she is liable to reverse it with interest. “And if this credit is not booked by Oct. 20th or Oct. 25th it will lapse.

3. Confusion on choosing the appropriate Return form:

Being completely a techno-driven system the structure of Goods and Services Tax is enough transparent, comprehensible and accomplished. And, on the basis of different significant terms like the source of income, annual turnover, nature of the business, etc. it has classified all the businesses across the nation in different categories i.e. to make the entire tax system more convenient. And with a view to run the whole process smoothly the CBIC (Central Board of Indirect-Taxes and Customs) issued various kinds of GST Return Forms.

The ‘purpose’ and ‘due date of filing’ for each GST Return is different. Of course, this is an effective step to bring transparency in taxation. But, the problem lies with the huge number of filings and most of the times taxpayers don’t know exactly which return form is relevant. And a wrong selection of return form may completely alter the scenario. And, it is good to know that this is a very common issue faced by most of the businesses in India since GST got implemented.

In such a confusing situation, contacting a CA or a GST Return filing professional (GST Practitioner) becomes necessary. Moreover, opting for an automated, cloud-based and, user-friendly software would also help you a lot. While on the other side, a wrong selection of GST Return form may invite complications for your business.

4. How to choose a GST software?

An advanced and GST compliant software would ease out the burden of the businesses up to a great extent. While purchasing GST software, the user should keep in mind the following factors:

  • A GST software that is 100% cloud-based helps you access your account on the go.
  • The software should be crafted with automation techniques. This will help you work smarter and save an ample amount of your time.
  • It should facilitate, customized GST billing, seamless return filing, auto-matching, and reconciliation of Invoices/Purchases/ITC and Returns.
  • Automatic calculation of ITC and Tax liability is another important factor.
  • The GST software must be capable of migrating data seamlessly from any software.
  • It must be safe and secure possessing data backup and restoration facilities.
  • The software must possess user-based roles and permission on the Single-Sign-On (SSO) dashboard for managing the business data security needs on the go.
  • It must be capable of scaling the resources as the business requirements.

Henceforth, purchasing a GST software needs vital research and it should perfectly balance your requirements and features of the software.

If you purchase an ordinary software, you would never be able to meet your objectives the way you wish. And it might lead to unnecessary legal complications. So, choosing a GST compliant software is important in the GST regime.


In short, we can say, to avail the benefits of Input Tax Credit, taxpayers should comply with the GST guidelines and should keep themselves posted on what’s new in the GST regime. This will help them execute their GST liabilities in a timely manner. Purchasing an advanced, automated and cloud-based GST software would definitely be a wise decision to stand out in the highly-competitive market. Becoming GST compliant in the right way would ensure the optimum growth of your business.

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Qualification: CA in Job / Business
Company: HostBooks Limited
Location: Gurugram, Haryana, IN
Member Since: 03 Apr 2019 | Total Posts: 5
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May 2021