Author compiled Format of Letter of undertaking or Indemnity Bond to claim Input Tax Credit (ITC) under GST.
Section 16 of CGST Act, 2017 states Conditions and eligibility for availing Input Tax Credit:
As per the provisions,
Registered person shall be entitled to avail the ITC on satisfying below mentioned conditions
#1 He is in possession of a Tax Invoice or debit note issued by a supplier.
#2 He has received the goods or services or both.
#3 Subject to the provisions of section 41, the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilisation of input tax credit admissible in respect of the said supply; and
#4 He (Recepient) has furnished the return under section 39
From the above conditions I draw your kind attention to Cond. #3
As per this condition, unless and until supplier has paid the tax which was collected from the recipient and also supplier filed the return u/s39 i.e GSTR3B; Recipient is not eligible to take input tax credit.
The main issue is how Recepinet can know that supplier has deposited the tax collected from him into the Government Account?
Answer is reflection in GSTR 2A?
Even if supplier without filing GSTR 3B (without depositing taxcollected, he can file GSTR-1 and same will be reflected in GSTR 2A
So, mere reflection of invoice in GSTR 2A is not a conclusive evidence that, tax collected was deposited to the Government.
So, to avoid litigation issues and notices and penalties in future,
It is recommended to take Indemnity Bond/Undertaking from the supplier stating tax collected from recipient is deposited to the Government.
In view of its importance we have compiled undertaking/Indemnity format from various sources available on the internet, which is to be taken from supplier before availing ITC, to avoid notices / penal actions by the department in future for wrongful availment of ITC.
(To be submitted on SUPPLIER letter head with seal and signature)
INDEMNITY BOND CUM UNDERTAKING
Recipient Name: M/s
Sub : Payment of GST Amount and filing of GST Return for availing such tax as Input Tax Credit (ITC) by you.
With reference to payment of GST amount and filing of GST Return for availing Input Tax Credit (ITC) by you as per eligibility provisions for the identified Invoices raised by us, we, M/s.____________________(supplier name) having our Registered Office at ________________________________, possessing GST Identification No.__________________________ hereby declare and undertake as follows:
1. We have disclosed all the facts relating to our Firm / Company to
2. We hereby declare that we have paid/agree to pay GST for the related invoices as per details below to the respective GST Authorities.
|Sl. No.||Order No.||Order Date||Invoice No.||Invoice Date||Assessable Value/Rs.||IGST/Rs.||CGST/Rs.||SGST/Rs.||Date of Payment|
In this connection, we hereby agree and undertake to furnish to you proof of payment of GST, which includes above mentioned GST amount.
3. We hereby declare that we have filed GSTR 3B related to the above mentioned invoices in time. In this connection, we hereby agree and undertake to furnish you proof of electronically filed GST Return to the authority.
4. We hereby agree and undertake to indemnify as under:-
i) The Firm / Company shall take all necessary safeguards to ensure availing of ITC on above mentioned invoices as per eligibility by
within the time limit provided in the GST provision.
ii) In case of rejection of ITC by the concerned Tax Authority, for non payment of GST amount by us or for any other reasons attributable to us , we hereby undertake and agree to indemnify
in full against all consequences, liabilities of any kind whatsoever directly arising from denial of ITC which includes interest and penalty arising out of such irregular availment of ITC by you opined by GST Authority.
We hereby agree and confirm that –
any breach of the above indemnification or undertakings shall be construed as breach of the terms and conditions for reimbursement of GST and RECEPIENT NAME shall be at liberty to take such action against us including recovering of reimbursed GST amount from
a) any of our Bank Guarantee executed in your favour, if any,
b) Security Deposit paid for any of your work ,if any or
c) Other unpaid invoices, if any of us raised with recipient
I / We declare that I am empowered to execute this Indemnity Bond cum undertaking and the same is given under the orders of proper authority as per the delegation of power of the organization.
Authorised Signature of the Indemnifier