The Central Government vide Notification No. 38/2023 has notified the Central Goods and Services Tax Rules (CGST) Rules, 2023 on 4th August 2023 with some new rules. One of them is introduction of Rule 88D, accompanied by Form GST DRC-01C which addresses a critical concern: the disparities that may arise between the auto-generated statement containing details of ITC i.e GSTR-2B and that availed in return i.e GSTR-3B.
What is Rule 88D?
The new Rule 88D specifies the manner in which mismatches in Input Tax Credit (ITC) of auto generated in GSTR-2B and ITC availed in GSTR-3B are to be dealt with. It requires the taxpayer to either:
- pay the excess credit amount with interest payable u/s 50 through Form GST DRC-03 or
- explain the reasons for the aforesaid difference on the common portal within 7 days from the date of intimation.
What is Form GST DRC-01C?
The government has introduced a new Form GST DRC-01C, a system generated form for the Intimation of difference in input tax credit available in auto-generated statement containing the details of input tax credit (GSTR-2B) and that availed in return (GSTR-3B) with respect to newly inserted Rule 88D.
The Form GST DRC-01C is bifurcated into 2 parts:
Part A comprises of the details of the period wise mismatch of ITC between GSTR-2B and GSTR-3B and such details shall be intimated to the taxpayer electronically on the common portal and shall also be sent to his registered e-mail address.
Part B comprises of the taxpayers response to such intimation received in Part A and the option availed by him amongst the two aforesaid.
Action required by the Taxpayer
If there is excess ITC availed in GSTR-3B than what’s available in GSTR-2B, then an electronic intimation shall be received on the common portal and via email highlighting the difference amongst the two.
In such case, there shall be 2 options available:
- Pay the excess credit amount with interest U/ s 50 through FORM GST DRC-03, or
- Explain the reasons for the difference on the common portal.
Time Limit: The time limit prescribed for the taxpayer to comply with either of the 2 options is 7 days from the date of such intimation.
Action Taken by the GST Authorities
In case the taxpayer does not respond or the reasons for differences explained by the taxpayer are not found to be acceptable by the proper officer, the said amount shall be liable to be demanded in accordance with the provisions of section 73 or section 74 of the GST Act, 2017.
Consequences of non-complying with Rule 88D
If a taxpayer does not furnish an explanation or address the differences indicated in FORM GST DRC-01C within the stipulated 7-days, they will be prevented from submitting their sales details i.e Form GSTR-1or using the Invoice Furnishing Facility (IFF) for the subsequent tax period.
It implies that if a taxpayer does not file Form DRC-01C (Part-B) for any period, it will not be able to file GSTR-1/IFF for the subsequent period. Also, they will be liable to pay the amount of excess ITC along with interest and may also be subject to other penalties.
In case of any observation or clarifications, the author can be reached at [email protected]
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