GST law was supposed to simply the Indirect Tax Practice & Compliance thereof. But even after more than 2 years of GST implementation, the same seems to be nightmare. When it comes to tax compliance, first question comes to mind of every registered person that eligible ITC need to be availed in proper manner & should not be lapsed. Reporting of ITC in incorrect manner may bring hardship to registered person.

CBIC notified Central Goods and Services Tax (Sixth Amendment) Rules, 2019 vide Notification No. 49/2019 – Central Tax dated 09-10-2019 and made some important changes relating to ITC availment and recently, a circular no. 123/12/2019 dated 11-11-2019 by CBIC has been issued to clarify how this provision is applicable, but a lot of clarifications are still awaited. Government in its Initial statement defined GST as Good & Simple Tax. But the same seems to be a very much complicated.

Rule 36(4) has been inserted in the CGST Rules, 2017– “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 in their GSTR-1 under section 37(1), shall not exceed 10 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 section 37(1)“

*10% as per 38th GST Council Meeting concluded on 18/12/2019

Practical difficulties being faced in implementation of Rule36(4)

1. Keeping Track of ITC availed in GSTR 3B every month (GSTR 3B don’t provide separate options for such disclosures/computations).

2. Working Capital Blockage due to the fact that ITC already paid on GST Invoices can’t be availed in GSTR 3B till it is reflected in GSTR 2A and liability would be set off against Cash payment.

3. Exporter’s Refund would be delayed/postponed till the invoices are updated by counter party in GSTR 1.

4. There is no option to generate GSTR 2A of Particular Date & is available as on Today only.

5. No clarity regarding Suppliers filing GSTR 1 on quarterly basis.

6. Reconciling GSTR returns with Books of Accounts would be practically most difficult task.

7. There is no option to check Invoice Wise & Supplier Wise Report for Particular Period on GST Portal. Only Month wise GSTR 2A is available online.

8. Entire responsibility regarding Complicated computations is on Taxpayer filing GSTR 3B on Self assessment basis. GSTN system won’t compute the same.

9. There is no system based auto computed Late Fees for Non/Delayed filing of GSTR-1. Lot of Vendor’s don’t file GSTR-1 on timely basis in the absence of system restricted Challan Payment requirement.

10. Return filing date of GSTR 1 is not mentioned in GSTR 2A.

11. Non Implementation of GSTR-2 (Return of Inward Supply) even after more than 2 years of GST implementation.

Keeping in view difficulties faced by MSME Taxpayers, government should defer the implementation of this rule till New Invoicing System & New Filing System to be implemented w.e.f. 01.04.2020. Government should also consider to implement this rule for Taxpayer’s above certain Turnover (Say 10 crore or above annual GST Turnover)onthly To Do List for Effective Tax Compliance 

1. Regularly reconcile GSTR 3B, GSTR 1, GSTR 2A with Books of Accounts & Invoices.

2. Make Exceptional Report of Bills not appearing in GSTR 2A & regularly follow up.

3. Prepare reconciliation of ITC availment in GSTR 3B & preserve it properly.

4. Take regular back up of Accounting Software.

5. If you need an Expert, Hire the one! Don’t try to be the one..!! i.e. Hire Professional Accounting Staff & GST Consultants.

6. File GST Return at least 3 Days before the Due Date. Don’t wait for Due Date.

7. Make Invoice wise/Debit-Credit Note Wise list of Purchase/Expenses Invoices having following Columns-

    • Sr. No.
    • Vendor Name
    • Invoice No.
    • Invoice Date
    • Invoice Value
    • Taxable Value
    • IGST
    • Cess
    • Vendor Email ID
    • Vendor Contact Number
    • Vendor Contact Person
    • Vendor’s GSTR 1 filing Option* – Monthly/Quarterly Filter
    • Invoice Month – Month Filter
    • Entered in Accounting Software – Yes/No Filter
    • Entered in Accounting Software – Date of Entry
    • Uploaded in GSTR 2A by Vendor – Yes/No Filter
    • GSTR 2A Submitted Status – Yes/No Filter
    • GSTR 2A Invoice details are Correct – Yes/No Filter
    • ITC availed in GSTR 3B – Yes/No Filter
    • ITC availed in GSTR 3B – Month Wise Filter
    • Invoice Payment made with 180 Days – Yes/No Filter
    • ITC eligible as per GST Law – Yes/No Filter
    • Physical Invoice available – Yes/No Filter
    • RCM – Yes/No Filter
    • TDS applicable (as per Income Tax) – Yes/No Filter
    • Remarks Column

* Can be check from GST Portal in the option ‘Search Taxpayer’ 

The above reconciliation need to be maintained on Tabular Basis in MS Excel

8. Monthly Reconciliation Sheet of ITC to be maintained for Ready Reference at the time of GSTR 3B Filing

Sr. Particulars CGST/SGST IGST Base Document*
a. Total ITC as per Invoices List of Invoices
b. Total Eligible ITC for the month List of Eligible ITC  Invoices
c. Total Ineligible ITC List of Ineligible ITC  Invoices
d. Total Eligible ITC as per GSTR 2A List of Eligible ITC  Invoices as per GSTR 2A
e. 10 % of Eligible ITC as per GSTR 2A (subject to Maximum ITC as per Invoices) Calculation Sheet
f. ITC claimed in GSTR 3B f. = d. + e.

*Can be extracted from Excel Filter

Thus proper reconciliation on month to month basis will help to ensure Effective & Timely Tax Compliance. Few much awaited clarifications from Government regarding difficulties faced in the compliance of the discussed Circular/Notification would resolve lot of issues and boost the morale of Honest Taxpayers.

Please refer all the relevant section, rules, notifications and amendments as applicable. The Author is not responsible for any losses incurred. Content is merely for sharing knowledge & Educational Purpose only. Author can be reached at for any queries, issues & recommendations.

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  1. SUNIL YADAV says:

    Yes, These are very helpful for Record maintains but there should be an option in 3b and gstr-1 to check it our 3cb and gstr-1 or 2a as per command such one or more months data can be veiw in one command not only monthly because it take much time to veiw in month wise to compare with books of account.

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January 2021