Arjuna (Fictional Character): Krishna, season of Festival have arrived, soon India would be celebrating the festival of Rakshabandhan with full excitement but how and when the taxpayers would celebrate Rakshabandhan of GST i.e. to say ITC matching and mismatching of supplier (brother) and recipient (sister) in GSTR-2A and with Books of Accounts?
Krishna (Fictional Character): Arjuna, Rakshbandhan is celebration of the purest form of brother and sister bond. On this day sister ties Rakhi to brother’s Wrist, in return of the promise of her safety. Similarly in GST matching and mismatching of purchase/sale bond needs to be done to ensure the promise to claim ITC between supplier (brother) and recipient (sister). This can be done by matching the details of GSTR-2A with purchases as shown in the Books of Accounts.
Arjuna: Krishna, what details are required to be verified from GSTR-2A and what are the possible issues which can be faced by taxpayers?
Krishna: Arjuna, the taxpayers have to match the details of the purchases made by them with the sale details of its supplier i.e. with transactions appearing in GSTR-2A. During this matching the taxpayer’s needs to match ITC claimed with ITC as appearing in GSTR-2A. Even if mismatch exists the taxpayer can claim such unmatched ITC provided all such transactions are genuine and risk of litigations arises.
Arjuna: Krishna, What to do if the suppliers have not uploaded invoices or furnished incorrect information by in its GSTR-1?
Krishna: Arjuna, There can be instances where the supplier have not furnished its sale details or furnished incorrect information in GSTR-1. The effect being non/incorrect reflection in GSTR-2A of the recipient. In such case the supplier needs to be informed about such mismatch and rectification of the issue in its upcoming GSTR-1.
As per the provisions of CGST Act, registered person not be entitled to take ITC in respect of any invoice for supply of goods or services or both in case mismatch arises.
Arjuna: What probable issues can arise while matching GSTR-2A with books in Annual Return of financial year 2017-18?
Krishna: Arjuna, taxpayers have to reconcile ITC claimed as per returns with ITC as appearing in GSTR-2A in Table 8 of Annual return. In Table 8A, ITC as per GSTR-2A would auto-populate and ITC claimed in returns would auto-populate in Table 8B. The ITC of financial year 2017-18 availed in 2018-19 is to be reported in Table 8C. Reasons of difference in ITC are to be given in it. Even if mismatch exists, taxpayer can claim such unmatched ITC provided, all such transactions are genuine. But in such cases taxpayers may have to face difficulties in coming future, if Tax Authorities initiates any action in regarding such mismatch. Also, judgement by High Court has been issued for claiming such ITC.
Arjuna: Krishna, What lesson the taxpayer should take from this?
Krishna: Arjuna, the time period for making amendments for the financial year 2017-18 has passed. However the tax payers can still make amendments in the invoices of financial year 2018-19. The recipient should get it rectified by informing it to supplier. So that he can amend in its GSTR 1. Such rectifications can be possible only if there are strong ties between the supplier and the recipient. Therefore on this Rakshabandhan the supplier and the recipient should cherish their sweet bond to protect themselves from penalty if any.