Input Tax Credit is available when it gets reflected in GSTR-2A/2B of the recipient. In this Article we are going to discuss when a taxpayer has to reverse the Input Tax Credit even when it is reflecting in his GSTR-2A/2B.
The recipient of service or goods availes the input tax credit in FORM GSTR-3B for a tax period in respect of invoice or debit note, the details of which have been furnished by the supplier in the statement of outward supplies in FORM GSTR-1 or using the invoice furnishing facility. It means if ITC gets reflected in GSTR-2A recipient avail the Input Tax Credit However it might be possible thar supplier fails to file return GSTR-3B and fails to pay the tax for the supplies made by him. In case the supplier failed to file GSTR 3B till the 30th day of September following the end of financial year in which the input tax credit in respect of such invoice or debit note has been availed, the said amount of input tax credit shall be reversed by the said registered person, while furnishing a return in FORM GSTR-3B on or before the 30th day of November following the end of such financial year:
In simplified language if we talk about for the FY 2022-23, if any supplier furnish invoice details in FormGSTR-1 and recipient has availed the ITC in FormGSTR3B but the supplier failed to file GSTR3B till 30th September 2023 then ITC shall be reversed by the recipient on or before 30th November 2023. If the amount of ITC not reversed on or before 30th November 2023, then amount shall be payable with Interest under section 50. Please note if the said supplier subsequently furnishes the return in FORM GSTR-3B for the said tax period, the said registered person may re-avail the amount of such credit in the return in FORM GSTR-3B for a tax period thereafter.
The above amendment i.e. Rule -37A is effective from 01st October-2022
Here the peculiar thing is how the recipient/taxpayer will verify the condition imposed by new Rule 37A? As the return in Form GSTR-3B is consolidated return, in case the supplier file the NIL GSTR-3B or report lower tax liability in GSTR-3Band Hence it is difficult to identify invoices for which tax was not deposited by supplier in case where tax actually paid by supplier is lower than tax payable as shown in GSTR-1 In that case recipient will not be able to know the non-payment or short payment of tax by the supplier of which the Input Tax Credit was availed. Therefore it will be interesting to see how the recipient will adhere the condition?
Source: – The above article is based on the Notifications No. 26/2022, Dated the 26th December, 2022.
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Disclaimer: The above article is prepared for understanding & study purpose. We recommend you consult your CA or tax consultant before taking any decision & author will not be responsible for any lose due to decision take based on above article.
About Author: Author is Practicing Chartered Accountant and founder of D Rahul & Associates, Navi Mumbai. You can reach Author at ca.rahuldwivedi@gmail.com or 9004485377.
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