Financial Year 2020-21 was a year of turmoil and total disruption of normal business for the Indian corporate and business world. While the first few months saw a complete standstill of business, the revival over the next few months was fast considering the damage caused in initial months. The Government of India, in order to safeguard the interest of the taxpayers introduced a string of measures throughout the financial year.

While return due dates were extended, phased out relief was granted from payment of interest and late fee on delayed filing of return for small as well as large business.

Considering the rapidly changing scenario in view of the disruption caused by Covid-19 pandemic and frequent government relief measures, it is highly obvious that taxpayers may have committed inadvertent errors while filing returns for the FY 2020-21 that the taxpayers want to correct.

GST return text on wooden blocks on grey background

The end of September 2021 is nearing, and it is that time of the year when the taxpayers get the chance to rectify those errors and make necessary adjustments in their GST returns to show the true picture of business conducted during FY 2020-21.

The below points summarized some of the key action points for the taxpayers to analyze and delve upon before filing of GSTR-1 and GSTR-3B for the month of September 2021.

1. Make amendments in GSTR-1 with respect to invoice / debit note/ credit note number or date, taxable value, tax amount, invoice value or GSTIN, as required.

2. Re-check the sales register to identify transactions required but not reported in GSTR-1.

3. Check on adjustment of advance tax liability to identify omission or error in adjustment, if any.

4. Check on reporting of export invoices wherein tax has been discharged to ensure correct mapping on customs part and avoid issues in refund.

5. Re-assessment of HSN/ SAC codes to ensure correct tax rate mapping.

6. Turnover reconciliation between financial books and GST sales register.

7. Ensure correct recording and reporting of NIL rated, exempted and non-taxable supplies in the GSTR-1.

8. Identify credit notes pending for reporting as September 2021 is the last month to report credit notes pertaining to FY 2020-21. After September 2021, credit notes with tax adjustment cannot be issued for FY 2020-21. Only commercial credit notes can be issued.

9. Reconciliation of purchase register with GSTR-2A/ 2B and overall analysis of purchase register to ensure the following:

– ITC in respect of all invoices/ debit notes of FY 2020-21 has been availed in GST returns. If any ICT is pending, avail the same in September 2021 GSTR-3B.

– Check on ITC reversed in the returns during the FY to identify any eligible credit inadvertently mapped as ineligible credit or reversed in the returns.

– Identify transactions wherein the supplier has inadvertently mapped your invoice as B2C instead of B2B and approach them to rectify the mistake.

– Identify invoices wherein incorrect GSTIN of the entity has been mentioned by the supplier and approach them to rectify the mistake. This will help in avoiding the loss of otherwise eligible credit.

– Separately record eligible and ineligible credits as the same will be required for reporting in GSTR-9.

– Invoice or debit note details reconciliation with details in GSTR-2A and action to be taken:

Sr No. Issue involved Action point
1 Invoice/ debit note details mapped with GSTR-2A No action to be taken, if credit already availed on such invoice or debit note.

If not, avail credit in the GSTR-3B of September 2021.

2 Invoice/ debit note AVAILABLE in GSTR-2A but physical copy of such invoice/ debit notes NOT AVAILABALE Avail and reverse the credit in GSTR-3B of September 2021. Once the invoice or debit note copy is received, the taxpayer can take re-credit in respect of such invoice or debit note.
3 Invoice or debit note is NOT AVAILABLE in GSTR-2A, but physical copy of such invoice or debit note is AVAILABLE The company should reach their suppliers and ask them to report the invoice or debit note in GSTR-1 of September 2021.

If the supplier still fails to report the invoice or debit note in September 2021 GSTR-1, since amended Section 16 of CGST Act, 2017 and Rule 36(4) of CGST Rules, 2017 has not yet been notified, the company can claim credit on the basis of physical copy of invoice/ debit note provided other conditions for availment of credit are met. In case of queries from department, the company will have to substantiate the availment of such credit.

4 Invoice/ debit note physical copy not received and details not available in GSTR-2A The taxpayer should immediately follow-up with supplier to report such transaction in September 2021 GSTR-1 and also provide copy of such invoice/ debit note.

10. In case the taxpayer has provisions of Rule 42 and 43 applicable to its business, the taxpayer should do final calculation of the ITC apportionment and identification of ITC required to reversed. Basis the analysis, the taxpayer should take the applicable following action:

– Actual reversal = reversal required as per final calculation – No action required.

– Actual reversal < reversal required during the year – Reverse the balance ITC in September 2021 GSTR-3B or pay the same through Form GST DRC-03 alongwith interest at the rate of 18%.

The interest will be calculated from 1st April 2021 (in respect of FY 2020-21) till the date of reversal or actual payment, as the case maybe.

– Actual reversal > reversal required during the year – Claim the credit of excess reversal amount in September 2021 GSTR-3B.

Note: The reversal is required to done on periodical basis while filing the return during the financial year, the provisions of Rule 42(2) and 43(2) of CGST Rules, 2017 allow the taxpayer to do one final definitive calculation before filing the GST return for September 2021.

11. Identify vendors in respect of whom payment is due. ITC in respect of any invoice/ debit note wherein payment is due for more than 180 days is required to reversed in accordance with provisions of Rule 37 of CGST Rules, 2017. However, it may be noted that once such payment is done, the company can re-avail such reversed credit.

12. Separately map the adjustments made in relation to FY 2020-21 in the April – September 2021 GST returns to ensure accurate reporting during the annual return filing.

13. Check whether all RCM supplies subject to GST have been correctly disclosed in GST return and applicable tax has been discharged on same.

14. Map credit of minor expenses which business often tend to ignore considering the amount of individual invoices/ debit notes as the cumulative amount of same may be large.

Additional Note: Currently, the due date of filing GSTR-1 and GSTR-3B for September 2021 is 11 October 2021 and 20/ 22/ 24 October 2021 respectively. The taxpayer still has adequate time left to act on above action points and ensure accurate reporting in the GST returns.

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Disclaimer: The above article is based on the basis of author’s understanding and view on the tax laws, tax rules, information on various tax platforms, the relevant circulars and notifications. Please refer to the latest law and consult the author before forming any opinion basis the information provided above as tax laws are subject to frequent changes. The author is not responsible for any issues arising as a result of opinion based on the above article without consultation. In any manner whatsoever, the views expressed in this article should not be construed as the views of the firm, the author is associated with. The author can be contacted on [email protected]

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5 Comments

  1. Mani Manickam says:

    Sir,
    In July 2021 our shop’s Out put was as follows:
    CGST 12000 SGST 12000
    Input 9000 9000 But the suppliers have not filed the return on the due date. Hence in GSTR 2B Nil amount under ITC appeared. In Aug 2021 our output was less than the input shown in GSTR 2B. Can the output of July 2021 can be adjusted in Aug 2021 if we file the GSTR 3B for both these months at a time. Kindly advice.

    1. GAURAV MITTAL says:

      Respected Sir,

      A. If you have satisfied all the conditions specified in Section 16 read with CGST Rules, 2021, particularly receipt of input invoice as well as receipt of complete inputs/ input services, then you can take either of the following two positions:

      1. Claim input tax credit in your GSTR-3B of July and discharge the tax liability through ITC adjustment to the tune of 9000 (CGST and SGST each) and pay balance 3000 in cash.

      Note: this is an aggressive approach and the department can always come back to you challenging the validity of the claim of such ITC as it was not appearing in GSTR-2A/2B.

      2. Discharge the entire 12000 (CGST and SGST each) tax liability of July 2021 in cash. This is a conservative approach and will not raise department queries.

      B. For the August 2021 return, you can avail of the ITC appearing in GSTR-2A and discharge your entire tax liability through ITC. Any balance ITC, you can carry forward and use September GSTR-3B return onwards.

      Thus, the filing of GSTR-3B for July and August 2021 together is of no use from the perspective of ITC adjustment or discharge of tax liability in cash.

  2. Sir, an useful article.
    However you have suggested “Avail and reverse the credit in GSTR-3B of September 2021. Once the invoice or debit note copy is received, the taxpayer can take re-credit in respect of such invoice or debit note.” Under which GST provision, we can avail and reverse if Invoice Copy is not available.
    In all these cases, more critical requirement is receipt of full goods and services.

    1. GAURAV MITTAL says:

      Sir, It is not directly prescribed in GST law per se.

      According to Section 16(2), possession of a tax invoice or debit note is a mandatory requirement for availing of the input tax credit.

      Thus, if the taxpayer has not received the tax invoice or debit note copy, on a conservative basis, it should take the credit of such invoice or debit note and reverse the same. Once it has the possession of invoice or debit note, it can re-avail such credit.

      In simple words, the action point recommended by me is a conservative approach to avoid loss of credit.

      Also, you have rightly mentioned that receipt of full goods or services is also important.

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