The government has taken a pre-emptive action to curb incorrect Input Tax Credit (ITC) claims after various frauds were unearthed in the past year on claimed ITC on fake invoices, or through physically non-existent businesses.

To ensure, ITC claimed is bona-fide and eligible, a new rule was inserted vide Rule 36(4) on 9th October 2019 vide notification No. 49/2019 – Central Tax. The CBIC released Circular 123/42/2019-GST dated 11th November 2019, to clarify certain aspects related to the rule.

1. Summary of the New GST Rule:

Rule 36(4) has been inserted, which is as follows:

Input tax credit to be availed by a registered person in respect of invoices or debit notes, the details of which have not been uploaded by the suppliers under sub-section (1) of section 37, shall not exceed 20 per cent. of the eligible credit available in respect of invoices or debit notes the details of which have been uploaded by the suppliers under sub-section (1) of section 37.

Explanation: A registered person could avail ITC on invoices or debit notes which are not reflected in GSTR-2A to the extent of 20% of the eligible ITC reflected in GSTR-2A.

Pre-requirement: Eligible ITC should satisfy the conditions u/s 16 & 17 of CGST Act r/w rule 36 of CGST Rules.

To simplify further, ITC admissible would be 120% of the eligible ITC reflected in GSTR-2A of the month or eligible ITC available in books of accounts, whichever is lower.

Summary of the Circular issued in this regard

  • The restriction of availment of ITC u/r 36(4) is not applicable for ITC on import of goods and services, ITC on which GST paid under RCM, ITC on ISD invoices. Only on ITC which would be reflected in GSTR-2A, restriction would apply (other than above).
  • The restriction would apply on invoices/debit notes on which ITC availed after 9th October 2019.
  • The restriction imposed is not supplier wise. Total eligible credit from all suppliers whose details have been uploaded to be considered (ineligible ITC would not be considered) for calculation 20%.
  • The amount of ITC admissible in respect of the invoices/debit notes whose details have not been reflected in GSTR-2A shall not exceed 20% of the eligible ITC available in GSTR-2A as on the due date of filing of the returns in FORM GSTR-1 of the suppliers (i.e. 11th of subsequent month).

Examples provided in the circular (linked to L1, L2, L3 – separate ledger suggestions)

Case -1

Particulars Amount in Rs.
ITC as per books of accounts 10 lakh
ITC as per GSTR-2A i.e. L1 6 lakh
Extent to which ITC available as per Rule 36(4) i.e. L2 6*20% = 1.2 lakh or 4 lakh, whichever is lower
Claimed in the current tax period 7.2 lakh (6 lakh +1.2 lakh)
Balance unclaimed i.e. L3 2.8 lakh

Case -2

Particulars Amount in Rs.
ITC as per books of accounts 10 lakh
ITC as per GSTR-2A i.e. L1 8.5 lakh
Extent to which ITC available as per Rule 36(4) i.e. L2 8.5*20% = 1.7 lakh or 1.5 lakh, whichever is lower
Claimed in the current tax period 10 lakh
Balance unclaimed i.e. L3 0

2. Practical implementation in business:

We have drafted a simple step-wise computation to be performed on a monthly basis.

Step 1 – Finalise Eligible ITC as per Books:

  • Ensuring ITC register is maintained with all headings such as Name & GSTIN of vendor, Invoice/CN/DN/Bill of entry/Self-invoice No. & date along with original invoice reference, Type of ITC, Details of taxable value, HSN, tax rate, POS, taxes.
  • Eligibility & ineligibility exercise to be performed.
  • Ensure receipt of goods/services & accounting takes place based on physical invoice only.

Step 2: Finalise Eligible ITC as per GSTR 2A:

  • Download GSTR-2A from the GSTN portal by 12th of the subsequent month (as the due date for filing GSTR-1 would be 11th of the subsequent month). 1st of next month succeeding the quarter in case of quarterly GSTR 1 filings. Excel/Json file option available.
  • Make a copy (original to be maintained separately as portal data is dynamic)
  • Remove invoices on which RCM is applicable (Where column – RCM applicable is “Yes”)
  • Remove invoices received from ISD through GSTR 6.
  • Remove invoices that do not pertain to your inward supplies. (supplier has incorrectly used recipient GSTIN).
  • Keep pending invoices uploaded but not satisfying ITC eligibility conditions under Section 16 r/w Rules.
  • Amendment invoices – obtain original invoice value from previous GSTR 2A and considered only differential value in current month. (original invoice number and date available in amendment invoice)
  • Now perform eligibility & ineligibility exercise [Section 17(5)] on remaining invoices.
  • Consider 120% of eligible invoices (from above) as maximum limit of ITC eligible under GSTR 3B for the month.

Note: ITC on import of goods/services & other RCM paid would not reflect in 2A. However, 100% of such credits is available.

Step 3 – Apply Rule 36(4) and claimed appropriate credit in GSTR 3B for the month

  • Compute 120% of total eligible ITC as per GSTR 2A from Step 2 against eligible ITC as per books from Step 1.
  • Claim ITC in GSTR 3B being lower of values arising from Step 1 & Step 2.

Also, for ease of tracking and accounting it is suggested to have 4 separate ledgers to track the ITC claim against inward supplies based on this new Rule:

  • Ledger 1 – Eligible ITC matched and claimed (L1)
  • Ledger 2 – Eligible ITC unmatched and claimed (where 20% limit applied and claimed) (L2)
  • Ledger 3 – Eligible ITC unmatched and unclaimed (L3)
  • Ledger 4 – Eligible ITC unclaimed (L4)

Note: Above 4 ledgers required under each tax head (CGST, SGST, IGST, Compensation cess). 

Other Important suggestions

  • Concept of vendor analysis could be implemented:
    • Study of vendors who are compliant and non-compliant for the past 6 months.
    • Non-compliant vendors – modify payment terms wherein taxes would be paid after GSTR 1 is filed and data correctly reflects in recipient portal.
  • To reduce burden, consider Pareto analysis – 80% of ITC generally arises from 20% of vendors. Recipient could concentrate on their compliance under GST.
  • Changes/configurations in ERP systems which could help with the reconciliations and return filings
  • Training to employees and vendors as well. There should not be any gaps in understating the restrictions as per the provisions.
  • Cash flow planning because ITC available as per books would not equal to the ITC claim in such tax period. Therefore, cash flow position required to be re-worked.
  • Could perform year to date (YTD) GSTR-2A analysis every month to ensure all ITC is considered. Although, the 20% limit is limited to ITC of such month.

3. Illustrations:

Apart from the general illustrations provided in the summary of the circular, we have provided two highly probable scenarios for which there does not seem to be any clarity in the GST provisions.

Note: We suggest to perform the computation on a monthly-basis, rather than on an invoice-level as it would be easier to perform and is in-line with the circular. (not notification).

Illustration 1: Case where vendor has delayed uploading invoices in his GSTR-1 and it has reflected in our GSTR-2A in subsequent tax periods.

Particulars 1st month 2nd Month 3rd Month
Available in books of accounts 140 100 60
Available in GSTR-2A 100 100 100
Maximum ITC available u/r 36(4) 120 (100*120%) 100 (books are less than 120%) 60 (books are less than 120%)
Total ITC for 3 months as per books 300
Total ITC for 3 months as per GSTR-2A 300
ITC availed after applying 36(4) 280
ITC not claimed due to new rule 20

 Illustration 2: Case where recipient has delayed accounting invoices (due to various reasons like goods in transit, invoices not received, etc.) and vendor has uploaded properly in his GSTR-1.

Particulars 1st month 2nd Month 3rd Month
Available in books of accounts 60 100 140
Available in GSTR-2A 100 100 100
Maximum ITC available u/r 36(4) 60 (books are less than 120%) 100 (books are less than 120%) 120 (100*120%)
Total ITC for 3 months as per books 300
Total ITC for 3 months as per GSTR-2A 300
ITC availed after applying 36(4) 280
ITC not claimed due to new rule 20

4. Validity/Challenging the new Rule:

Excessive legislative power in the guise of Rules – Restriction on the ITC claim – effective Section 43A of the CGST Act although introduced w.e.f 1st February 2019 has not yet been made effective. The Central government without notifying the provisions has, introduced the restriction through rule 36(4) by usurping its own function. It has been well settled that Indian Constitution recognizes the concept of distribution of powers, where the executive arm cannot exercise powers of legislative arm and any such exercised action is void ab-initio [Alstom India Ltd. (Gujarat High Court)].

Violates the right of the recipient – The amended rule 36 (4) lacks the machinery provisions for the de facto implementation. Due to non-implementation of GSTR 2, the amendment therefore de facto injures the substantive right of recipient of supplies in blatant violation of the law. In erstwhile service tax era, the Supreme Court had observed in the case of Kay Kay Industries [ 2013(295) ELT (177) that it would be practically impossible to do so.

Arbitrary, unreasonable and un-intelligent differentia – The government at its whims have introduced the restriction of ITC to the extent of 20% without any basis. The 20% threshold in essence indicates that only 20% of the taxpayers who are unable to file their GSTR 1 have been defaulting in the tax payments. Particularly when government GST collection has not fallen any-where below 10-15% over any month over its 2 years’ implementation. The 20% threshold is therefore arbitrary, without basis and creates un-intelligent differentia between persons whose vendors have uploaded supplies and whose vendors haven’t, and accordingly is in violation of Article 14 and 19 of the Constitution of India. 

5. Frequently Asked Questions:

1. Whether the calculations are to be performed invoice-wise or period-wise?

a. Issue: The Notification introducing the new rule uses the words “Input tax credit to be availed by a registered person in respect of invoices or debit notes, the details of which have not been uploaded by the suppliers” although point 4 & 5 of the Circular indicate that the computation needs to be performed for the month rather than invoice-wise.

b. Our Analysis: The government was supposed to provide the matching, modifying and rejecting facility on the GST portal through GSTR 2 & 3, which has been deferred from inception of GST. Performing the reconciliation invoice-wise brings up following difficulties:

i. Invoices accounted in books in previous month, but reflecting in GSTR 2A in subsequent months. When to consider such credits? If part of 20% value, difficult to match.

ii. Invoices accounted in books in subsequent months, although it reflected in GSTR 2A of previous months. When to consider such credits?

iii. Which invoices to be considered for the 20% additional values, and which should not be considered? This may also lead to not being able to avail entire eligible 20% additional value. 

2. Registered RCM supplier transactions covered under the New Rule?

a. Issue: The circular only clarifies that “documents issued under RCM” need not be considered for compliance of the new rule.

b. GST provisions: Section 31(3)(f) requires to raise a self-invoice when the supplier providing RCM outward supplies is not registered under GST. (basis to claim ITC).

c. When the RCM supplier is registered, his invoices reflecting in GSTR-2A should be included in the 20% calculation, or does it have to be excluded?

d. Our Analysis: As the tax on reverse charge in enabled on payment, and the supplier is not paying any taxes, such Registered RCM supplies would not be covered under the new rule.

3. Whether an Input Service Distributor (ISD) is covered under the New Rule?

a. Issue: The Circular provides clarity only recipient of ISD invoices and not the ISD registered entity itself.

b. GST Provision: Rule 36(1) of CGST Rules, uses the words, ITC can be availed…. including the ISD on basis of documents such as tax invoice, debit note, etc. Section 20 says that the ISD shall distribute the ITC (eligible/ineligible).

c. Our Analysis: The new rule would be applicable to an ISD registered entity as it is covered under Section 36(1). The GSTR 6 portal also allows for manual addition of invoices having invoice date of previous periods.

4. GSTR 1 delayed by vendors? What is the impact

a. Issue: The circular requires that the GSTR 2A is to be downloaded as on the due date of GSTR 1 filing, i.e. 11th of the month for monthly filing and last day of the succeeding month for the quarter. What happens is the vendor delays filing the GSTR-1?

b. Our Analysis: The substantive right in the credit is available based on satisfactions of conditions mentioned in Section 16. As the GSTR 2 & 3 is not available, the recipient cannot ensure the vendor has paid the taxes to the government, therefore, where the entries reflect in GSTR-1 he could be said to have earned the right in the credit. Delay in filing only delays the right in the credit, but cannot take it away.

5. Amendments made by supplier on invoices previously considered. How to compute?

a. Issue: Where the new rule has been computed on a monthly basis, and few invoices of previous periods have been amended (upward or downward) in subsequent months how to consider for the computation of the new Rule?

b. Our Analysis: The amendments in subsequent months would disclose only original invoice details but not values. The value shown in amendment would be the final revised value and not the difference. Therefore, supplier may be expected to manually compute the difference and allocate to the GSTR 2A value in the amendment month to ensure the intention of the law is upheld. Such cases have not been considered while framing the new rule, nor does the circular clarify such an issue.

6. How to manage GSTR 2A being dynamic report?

a. Issue: As the GSTR 2A report is dynamic, would the reconciliation be required to perform Year to Date (YTD) basis? (Eg: For March 2020, re-download Oct 19 to Feb 20 GSTR 2A to check delayed updates by the vendors? What are the subsequent steps?)

b. Our Analysis: Yes, YTD reconciliation would ensure accurate ITC claims, and any delays in filing GSTR 2A also could be considered.

7. Whether data uploaded but not submitted to be considered?

a. Issue: In GSTR 2A, a column appears for whether the GSTR 1 was submitted (Y/N) by the supplier. Whether only submitted details are to be considered for the 20% computation, or even uploaded values can be considered? This has not been addressed clearly in the circular.

b. Our Analysis: As the GSTR 2A downloaded has the details uploaded by the vendor, we could be considered the same, whether submitted or not, as it appears in our GSTR 2A. The Rule nor the Circular restrict such ITC claim.

Conclusion:

There is serious doubt on the legal validity of the aforesaid conditions/restriction due to fact that there is no provision that enables this restriction/condition. The provisions like section 42, 43 or 43A are not implemented yet. The matching report in GSTR-2A also lacks proper legal backing and is very dynamic, Further, there are practical difficulties in implementing this rule because notification or circular has not answered many practical situations. Though the objective of the rule is to curb the revenue leakage, the implementation can be made only after the new returns are made operative.

For any further queries/comments please write to authors akshay@hiregnage.com and darshan@hiregange.com

Special thanks to CA Ashish Chaudhary, CA Roopa Nayak, CA Vasanth Bhat for their valuable inputs & suggestions.

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45 Comments

  1. Suresh says:

    Many of the suppliers file their GSTR1 between 12th and 20th. In such cases, what happens if we still take ITC of these Invoices ( not filed before 11th of the month) in our GSTR3B? What are the penal provisions in such cases?..(Sorry this comment made elsewhere by mistake).

    1. Akshay Hiregange says:

      Dear Suresh,

      Perform Year to Date (YTD) Reco to ensure data being upload late is considered. As GSTR 2A is dynamic this would be required. Suggest to perform every 4 months

  2. Raviraj Shetty says:

    Dear CA Akshay,

    A very nice article with lucid explanations.Explained it very well with alternative examples. The article has thrown some light on the practical difficulties faced by the tax payers from the hurriedly issued unthoughtful notification.

    Thanks for the article.

    Govt could have reduced the hardship of taxapaters, if it has given some time limit to claim all pending GST ITC on Form 3B, may be by 31.12.2019. It would have reduced the dificulties to a significant level.

    1. Akshay Hiregange says:

      Dear Raviraj,

      Thanks!
      Yes, personally was expecting an extension of ITC claim for FY 18-19 up to Dec 19. Also, do expect this rule to be quashed.

  3. siva1976 says:

    Dear Sir,
    If a register dealer sold his old machinery to some person in Mar’2018 and collected GST from him. But in GSTR-1 Return filing wrongly mentioned as B2CS insted of B2B. The party also availed the GST in the month of Mar’18. But the GST credit not reflected in GST portal.If any rectification is possible in GST portal. Kindly advise me.

    1. Akshay Hiregange says:

      Dear Siva,

      The new rule is applicable prospectively, i.e. you need to verify reflection in GSTR 2A from 9th October 2019 onwards. The credit of Mar 18 was eligible maximum upto Mar 19 GSTR 3B due date. If not claimed it would be a lapsed credit. Please mail me – akshay@hiregange.com for further queries.

  4. Binit Kumar Gupta says:

    One of My Client dealing in steel industry, Purchased Material from a Supplier having ITC Credit approx Rs. 25.00 Lacs, submit GSTR 1 quarterely, as his last year turnover was below 1.50 cr. Now, as the transaction happen in October 2019, and the supplier will upload GSTR 1 in Jan 2020, now How my client will take credit of that, as it is a huge amount of credit involved in this transaction.
    Please suggest me the remedies.

    1. a says:

      Dear Binit

      There is no clarification for quarterly filers in the Rule or the circular.
      ITC can be claimed based on invoice and the GSTR 2A can be downloaded on a quarterly basis too. Re-perform the same reconciliation on YTD (year to date) basis, to ensure ITC claim reflects in GSTR 2A. If not sure of upload by vendor, claim ITC after reflection in GSTR 2A.

    2. AkshayH says:

      Dear Binit,

      There is no clarification for quarterly filers in the Rule or the circular.
      ITC can be claimed based on invoice and the GSTR 2A can be downloaded on a quarterly basis too. Re-perform the same reconciliation on YTD (year to date) basis, to ensure ITC claimed reflects in GSTR 2A. If vendor is from un-organised sector or cannot reply he would file, suggest to claim ITC after GSTR 2A upload. (Hold tax payment until reflection)

    1. AkshayH says:

      There is no clarification for quarterly filers in the Rule or the circular.
      ITC can be claimed based on invoice and GSTR 2A can be downloaded on a quarterly basis too. Re-perform the same reconciliation on YTD (year to date) basis, to ensure no missed out ITC. (other than the legal requirement of doing monthly)

  5. K.RAJENDRA PRASAD says:

    Sir, In case of quarterly return filing suppliers who will not upload on GST Site do we have to claim ITC after they file return or is any concession given for these situations?

    1. AkshayH says:

      There is no clarification for quarterly filers in the Rule or the circular.
      ITC can be claimed based on invoice and GSTR 2A can be downloaded on a quarterly basis too. Re-perform the same reconciliation on YTD (year to date) basis, to ensure no missed out ITC. (other than the legal requirement of doing monthly)

  6. Venkatesh Gajula says:

    Do we have to less Credit notes figure from (B2B plus B2BA plus Debit notes) before arriving at eligible credit as per gstr 2A for applying 120%???

    1. AkshayH says:

      Conceptually yes Mr. Venkatesh. But it is not a cost, as you would reduce from GSTR 2A and also ITC register (books of accounts).
      For amendments please refer FAQ #5.

  7. rm says:

    01.businessmen are getting fed up of gst portal based returns and unending notifications valid from date of notifications……….

    Pls suggest is there any alternative way of gst computation other than relying on gst portal formats output tax less input tax=gst payable or refundable at slab rates. as the gst dept also not sure of manipulation, misuse of input by higher rate input bills viz: 28,18% etc for lower rates output services i.e. 5%,12%,18%

    over-reliance on gst portal becoming burden.

    solution lies is permitting alternative filing of returns based on workings taxable turnover less eligible ,exempted, below threshold limit purchase/inputs irrespective of hsn,sac codes for tax rate applicable to output goods/services.

    Seamless Flow of Input Tax Credit: An Illusion to infrastructure industry in public utility services which had exemption from services under service tax.
    Seamless Flow of Input Tax Credit is the backbone of the GST regime – which is now getting restricted to 20% due to dept not relying on portal based gstr 2a,gstr1,gstr3b, hsn,sac code wise , month wise reconciliation since calendar date wise due dates of returns for business cannot be productive, executed and controlled for indian indirect taxes system for huge volume of varied business- bills and data

    .

  8. rm says:

    businessmen are getting fed up of gst portal based returns and unending notifications valid from date of notifications……….

    Pls suggest is there any alternative way of gst computation other than relying on gst portal formats output tax less input tax=gst payable or refundable at slab rates. as the gst dept also not sure of manipulation, misuse of input by higher rate input bills viz: 28,18% etc for lower rates output services i.e. 5%,12%,18%

    over-reliance on gst portal becoming burden.

    solution lies is permitting alternative filing of returns based on workings taxable turnover less eligible ,exempted, below threshold limit purchase/inputs irrespective of hsn,sac codes for tax rate applicable to output goods/services.

    Seamless Flow of Input Tax Credit: An Illusion to infrastructure industry in public utility services which had exemption from services under service tax.
    Seamless Flow of Input Tax Credit is the backbone of the GST regime – which is now getting restricted to 20% due to dept not relying on portal based gstr 2a,gstr1,gstr3b, hsn,sac code wise , month wise reconciliation since calendar date wise due dates of returns for business cannot be productive, executed and controlled for indian indirect taxes system for huge volume of varied business- bills and data

    .

    1. AkshayH says:

      Dear Sir,

      Unsure if you actually expect an answer or were just expressing your displeasure with GST & government!
      There is no other computation method (which I can think of) and GSTR 2A has to be relied upon.

  9. Antony Thekkan says:

    Dear Sir

    Thank you very much for such a detailed and informative article.

    But, I have a doubt:

    How to take ITC Credit when the supplier files the GSTR1 after the due date of a particular month or even after months?

    Can you please clarify?

    Thanks and regards

    Antony

    1. AkshayH says:

      Mr. Antony – No clarification provided in the Circular.

      Author view – To download GSTR 2A data periodically (alongwith monthly requirement), and to re-perform reconciliation to ensure ITC is not missed out. Rule 36(4) has been included to ensure recipient is not claiming ITC on fake invoices/bills, i.e. tax on which is not paid by supplier. Therefore, doing periodic reconciliation between GSTR 2A & ITC register (books) is the answer. (No pain, no gain?)

  10. Deepika says:

    What if we are claiming credit of Rs. 12000 for a month after using that 20% limit and we have to get the credit of Rs. 8000 from the supplier and we got the credit from the supplier in the subsequent months, then how can we able to avail that credit?

    1. AkshayH says:

      Hi Deepika, It would be better with clarity on what was ITC as per books, ITC as per 2A for 1st month and subsequent months to provide a correct reply.

      Although, where you have claimed ITC on an invoice not reflected in 2A but forming part of 20% ad-hoc value, then when such invoice does reflect in GSTR 2A, it need not be considered for the calculation in such month. (This is author view and not clarified anywhere).

  11. subhajit says:

    Sir, all my suppliers are quarterly return filers that means I have to pay all the Output GST of OCT and NOV 2019. The due date of Q3 GSTR 1 is 31-01-2020 whareas the due date of 3B for Dec 2019 is 20-01-2020, then how can I get all the data for Q3 in GSTR 2A. Pls clarify sir.

  12. I.K.Gandhi says:

    In case the vendor/seller files its return Quarterly, for example, the invoices of July months will be declared by him with the September month’s return, then how this exercise is required to be done for July and August months ITC? Please explain.

    1. Satish says:

      The Article is very well explained. Entities which has maximum small /MSME Vendors who file returns on quarterly basis will be hit. I think the Government is viewing matters only from revenue and not looking at the hardship of the Assessee

  13. Sathya says:

    Monthly fillers like us vs quarterly fillers greatly affected by the new rule. We should wait for 3 months till 1st feb to avail the credit of october ITC . It will greatly affect our cash flow. We too cant shift to quaterly filling as we are in between financial year. why they are changing the rule in between the financial year then? Will be happy someone escalate this GST officials.

    1. AkshayH says:

      Dear Sathya, this has been escalated, expect clarification.
      Alternatively, perform same reconciliation on YTD (year to date) basis, to ensure no missed out ITC. (other than legal requirement of doing monthly)

  14. rajiv says:

    01.the illustrations shown in 3 cass, but as per gst inputs can be claimed from july 17 to mar18 till the annual returns are filed.
    so in such a case in your example for first month say oct19:-
    01. possibility the gstr 2A -portal itc could be inclusive of related to past periods from july17 to oct19 and not just related to oct19 for mechanical comparision,
    02. also updation of books of account for remote distant sites based on gstr2a portal report for example , the itc shown in books in oct19 but relates to gstr 2a for prior periods say from july17 to oct19 which can be claimed till annual returns extended dates as per gst rules. to this also inclue unfiled retruns in tons of delaers due to compleicity, funds based retruns filing, delays in govt-state ,centre funded projects payments, state-centre departments implementation of gst, pending claims etc etc particularly related to infrastructure projects with payments based on state/centre budgets, certification of bills, ,miles stones, varations, rate revisions, quantity escalations, quality recoveries in contractual terms etc doe not permit straight jacketed reco monthly/ytd…sir

    1. AkshayH says:

      Dear Rajiv,

      I also agree. It has to be performed invoice wise, although, the ability to maintain track, and ensure accuracy with compliance would be a monstrous task! I have tried to simplify the process in this article, to the extent where business is not impeded and tax compliance does not take up entire time.

  15. RAJ says:

    article is excellent with examples to understand sirs. do you have any analysis of what percentage of total gst dealers file their returns in time- particularly rural set up based and un organised sectors of infrastructure industry where awareness levels required with portal operating expertise and analysis and tracking huge volume back log data for reco. etc are practically not feasible to implement. also gst portal returns linked to payments , no possible of revisions, tracking ytd transactions bill wise etc need for every company to keep in house gst concurrent auditor for transaction level monitoring of input losses claims in portals.please also provide articles on annual returns from july 17 to mar18, retruns filing without interest and penalties feasiblity for huge unfiled back log of dealers etc etc

  16. AkshayH says:

    Dear Readers,

    The above article is only the authors view. Please note, the wordings in law require the activity to be done invoice wise although, in our view this raises many unresolved issues. Coupled with the fact that the machinery was not provided by the government and GSTR 2A is a dynamic report, it creates a impossible situation for tracking, reconciliation, re-verification, etc. on a continuous basis. Therefore, the monthly option was provided to ease the burden and to comply with the provisions (to an extent) in the above article.

      1. Suresh says:

        Many of the suppliers will file their GSTR1 between 12th and 20th. In such cases, what happens if we still take ITC of these Invoices ( not filed before 11th of the month) in our GSTR3B? What are the penal provisions for such cases?

  17. vikram kandpal says:

    I believe in example no-1

    in 2nd month your opening balance as per account should be 120 since 20 is balance b/f in books of account which has not been claimed,then your balance as per book and as per return would match after the closer of month 3

    1. AkshayH says:

      Dear Vikram,

      Conceptually yes. Although, this point has not been clarified in Circular. Therefore, we suggest to perform a Year to Date reconciliation between GSTR 2A & ITC register to ensure no ITC is missed, or excess claimed.

  18. Harsh says:

    Whether ITC needs to be considered in aggregate or CGST/SGST/IGST wise (individually) ? Because answer differs to that. in books CGST/SGST is taken but as the supplier is not required to file monthly GSTR-1, its not possible to take credit of the same due to Individual analysis even though the buyer is already having sufficient IGST to cover within that 20% eligibility for that CGST/SGST credit not appearing in 2A.
    Any suggestions?

    1. AkshayH says:

      Dear Harsh,

      This would have to be done tax head wise. So IGST + 20% can be claimed. (considering IGST as per books is higher)
      For quarterly filers there is an issue which has not been addressed in notification or circular.
      Suggest to claim credit while performing Year To Date reconciliations.

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