GST ITC mismatching in Form GSTR1, GSTR 2A, GSTR 2 and GSTR 1A

Input Tax Credit Mismatching Procedure in Filing Form GSTR 1, Form GSTR 2-A, Form GSTR 2 and Form GSTR 1-A

Everyone knows that the due date for filing Form GSTR-1 for the period from July 2017 to March 2018 is on 31.10.2018.

 The Due date for filing Form GSTR-1 is necessary for Form GSTR-2, GSTR-4A and GSTR 6-A. Goods and Service Tax Act sub rule 3 of Rule 59 described that the supplier disclosed his out ward supply details in his Form GSTR-1 will be available to the concerned Recipients in Part A of GSTR 2A, GSTR 4A or GSTR 6-A as the case may be through the common portal “ after the due date of filing of Form GSTR-1.”

 The Invoice level outward supply information pertaining to the tax period reported by the supplier in GSTR-1 to be made available to the recipient in Form GSTR-2A on auto populated method as prescribed under CGST Rule 60(1).

 So now we can understand that final GSTR 2-A details for the year 2017-18 will be available to the recipient on 1st day of November 2018 .

 The next step is to understand about the Form GSTR-2. Under CGST Act, Form GSTR-2 and GSTR-2A were prescribed under Rule 60(1). The Government has provided Education Guide under the head “INSTRUCTIONS”. Which is prescribed and available along with Form GSTR-1 and GSTR-2.

 In the Form GSTR-2, details in Table number 3 relates to inward supplies received from Registered persons other than the supplies attracting reverse charge. And the details in Table 4 relates to inward supplies on which tax is to be paid on Reverse Charge Mechanism.

 Item number 2 to the ‘ Instructions’ which provided along with the Form GSTR-2 instructed that

 “ Table 3 and 4 to the Capture information of:

(i) Invoice level inward supply information, rate wise, pertaining to the tax period reported by the supplier in Form GSTR-1 to be made available in Form GSTR-2 based on auto populated details revived in GSTR-2A.”

 So, we can easily understand that if the supplier reported his outward supplies details in Form GSTR1 will be auto populated to the recipient in Form GSTR2 under table 3 and 4 respectively which is also auto populated through Form GSTR2-A. It is an auto Chain processing.

Recipient What to do on Form GSTR-2

 Item number 2 (iii) to the ‘Instructions’ prescribed with Form GSTR-2 instructed as follows:

 “ 2(iii) : The recipient tax payer has the following option to act on the auto populated information:

(a) Accept (b) Reject (c ) Modify (d) Pending for action.

 So, the recipient has power and option regarding inward supply details available on the Form GSTR-2 either can accept, reject or modify or keep pending for action ( if goods or Services have not been received in the tax period).

Recipient can Add Invoices In Form GSTR-2

 When a recipient have received the Goods or Services and he is in possession of Invoices but such details were not available in Form GSTR-2 to the recipient , under such circumstances , item number 2(v) to ‘ Instructions’ prescribed with Form GSTR-2 instructed that recipient tax payer can also ‘add’ such omitted Invoices by using ‘add’ key.

What FORM GSTR-2 Facilitates- Instructions

1. Inward supplies on which tax is to be paid on reverse charge is to be auto populated in Table 4-A to Form GSTR-2.
2. Details relating to import of goods/ Capital goods from outside India as well as supplied by an SEZ unit to be reported ratewise by recipient tax payer in Table5. Wherein recipient to provide Bill of Entry information including six digits port code and seven digits bill of entry number. Taxable value in Table 5 means assessable value for customs purpose on which IGST is computed,
3. Table 7 relates to supplies received from composition taxable person and other exempt / NIL rated / Non GST supplies received , captures information on a gross value level.
4. Table 8 relates to ISD credit received , an option to similar to Table 3 is not available to Table 8. It will be required to re determined the eligibility as well as the amount eligible as ITC.
5. TDS and TCS credit would be auto populated in Table 9.
6. Consolidated statement of Advance Paid or Advance adjusted on account of receipt of supply should be reported in Table 10.
7. Input tax credit Reversal or Reclaimed facility provide with option to add or reduce from output liability on account of :recipient not made payment within 180 days under Section 37(2) and inputs or input services partly used for business and partly used for others and in the case of Capital goods used partly for taxable goods and partly for exempted should be reported in Table 11.
8. Amendments to details of inward supplies furnished in returns for earlier tax periods in Table 3,4 and 5 should be reported in Table 6.
9. Table 12 capture additional liability due to mismatch as well as reduction in output liability due to rectification of mismatch on account of filing of GSTR-3 of the immediately preceding tax period.

Effect of Form GSTR-2 and Form GSTR3

 Item number 10 of ‘Instructions’ prescribed with Form GSTR-2 instructed that the eligible credit from Table 3, Table 4 and Table 8 relating to inward supplies to be populated in the Electronic Credit Ledger on submission of its return in Form GSTR-3.

 Many people confused that whether Form GSTR3-B is “ in lieu of “ Form GSTR-3. Originally on 01.07.2017 CGST Rule 61 (5) prescribed that …..return in Form GSTR-3B in lieu of Form GSTR3. Whereas by amendment made in CGST Notification number 17 of 2017 dated 27.07.2017 kept missing the word “ inlieu of “ So we can understand that Form GSTR3 and Form GSTR 3-B are operating individually.

 CGST Rule 61 (1) emphasis that every registered person other than a person referred to in Section 14 of IGST Act or an Input Service Distributor or a non resident taxable person or person paying tax under section 10 or 51 or 52 shall furnish a return specified under Sub Section (1) of Section 39 in “Form GSTR-3 electronically through the common portal either directly or through a facilitation centre notified by Commissioner.

Effect Of Form GSTR1-A And Form GSTR-1

 CGST sub Rule (4) of Rule 59 prescribed that the details of Inward Supplies added, Corrected or Deleted by the Recipient in his Form GSTR-2 under Section 38 or Form GSTR4 or GSTR6 under Section 39 shall be made available to the supplier electronically in Form GSTR-1A through the common portal.

 And such supplier may either accept or reject the modification made by the recipient.

 And Form GSTR-1 furnished earlier by the supplier shall stand Amended to the extent of modification accepted by him.

Effect of Form GSTR-1, Form GSTR-2 and Supplies to B2C

 GST taxation is a new method of indirect taxation in India with its Act, Rules and Forms.

 So in the initial period i.e. from July 2017 to March 2018 the Registered persons under GST Act, Consultants, Accountants were prepared Forms prescribed under the GST in connection with Inward and outward supplies and ITC and uploaded data in the GST common portal on their own wishes without proper knowledge on GST law and without knowing the impact on taxes , penalties and interest thereon. Some times the recipients were failed to provide their GSTIN to the suppliers at the time of issuing Tax Invoices. Hence the said supply details were originally reported as sales to B2C in Form GSTR-1. But such supply be relates to B2B. The Recipient may be accounted for and claimed ITC on such invoices in Form GSTR-3B.

 And in certain cases, the recipients GSTIN in the Suppliers’ Tax invoice may be varied , hence timely to file Form GSTR-1 the suppliers may be forced to report such outward supplies under B2C transactions.

 The Due date for filing GSTR-1 for the year 2017-18 is on 31.10.2018. Such error (reported as B2C instead of B2B ) to be made amended on or before 31.10.2018 in Form GSTR-1.

 In this circumstances, if the Recipient received Supplies without specified GSTIN on the supplier’s tax invoice, he has right to claim ITC provided he must hold the Tax Invoice and received possession of Goods/ Services. In this cases the recipient may correspond the suppliers with details of supplies and ITC mismatching through Form GSTR-2.

 If the suppliers accept it , the outward supply details will be available in Form GSTR-1 to the supplier.

 It is Critical position that if the outward supply transaction was previously ( on or before 31.10.2018) reported as B2C transactions and again bound to approve modification in GSTR1-A the result would be Double the outward Supply turnover which once again attract Taxes, Penalty and interest.

 So, such needy transactions, Amend the B2C turnover in GSTR-1 on or before 31.10.2018.

Note: Form GSTR2 and GSTR 1-A alone deferred till completion of due date for filing GSTR-1 i.e 31.10.2018. Neither the relevant Sections nor Rules were not postponed. So the law ( filing Form GSTR-2 and GSTR 1-A ) will come into force from 01.11.2018.