One month time left out to reconcile books of account of F.Y. 2018-19 to ensure that maximum Input Tax Credit (ITC) is claimed.

As per the provision u/s 16(4) of CGST Act, 2017, a taxpayer can take input tax credit in respect of any invoice or debit note for supply of goods or services or both before the due date of furnishing of the return u/s 39 for the month of September following the end of financial year to which such invoice or invoice relating to such debit note pertains or up to the filing of relevant annual return, whichever is earlier. The extract of the said section is reproduced below for easy reference.

“A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the due date of furnishing of the return under section 39 for the month of September following the end of financial year to which such invoice or invoice relating to such debit note pertains or furnishing of the relevant annual return, whichever is earlier.”

As per the aforesaid provision, the time limit for taking input tax credit for the financial year 2018-19 is up to the filing of return (GSTR-3B) for the month of September 2019. The due date of filing of GSTR-3B for the month of September 2019 is 20th of October 2019. Thus, a taxpayer has the entire month of September 2019 at his disposal to carry out reconciliation of his books v/s return. On reconciliation between the return filed and the books, if he finds any difference then appropriate action is required to be taken by the taxpayer in the September 2019 month’s return. The reconciliation is necessary because at the time of filing of return in Form GSTR-3B it might have happened that ineligible credit is inadvertently claimed. Also, it is possible that eligible credit is missed out to be taken. Hence, it is very important to relook into the books of account to ensure that eligible input tax credit is taken.

Rule 69 of CGST Rules, 2017, speaks about matching of claim of input tax credit. In the explanation given in the said rule it is mentioned that “the claim of input tax credit shall be considered as matched where the amount of input tax credit claimed is equal to or less than the output tax paid on such tax invoice or debit note by the corresponding supplier”. Thus it becomes essential to carry out GSTR-2A reconciliation of FY 2018-19 with the input tax credit claimed in the GSTR-3B return. Since, the return in Form GSTR-2 never came in to effect the necessity of reconciling GSTR-2A was not required. Thus, the taxpayer claimed the credit based on his self assessment.

In respect of the aforementioned rule the reconciliation of each of the invoice auto-populated in GSTR-2A report of the buyer with the invoice wise credit claimed in GSTR-3B is necessary to be carried out. In case if any supplier has not shown the invoice in his GSTR-1, then necessary communication can be sent to him with a request to file the return by disclosing the missed out invoice. And if the detailed of supply was furnished inadvertently in B2C table of the GSTR-1 return by him then those invoices will not auto-populate and in that case buyer will have to inform him and the supplier will have to correct it in his GSTR-1 to be filed for the month of September 2019 on or before 11th October, 2019. Thus, the month of September 2019 is very crucial month for the taxpayer to take appropriate action on the input tax credit aspect.

The same activity will also be carried out for the customers. It becomes a moral responsibility of the supplier to intimate all his customers to carry out their respective GSTR-2A reconciliation. In case the customers find any discrepancies they will inform their supplier and supplier should be able to take action on them in the GSTR-1 to be filed for the month of September 2019 on or before 11th October, 2019.

It is needless to mention that the contact list with phone number, mobile number, email id of the suppliers and customers need to have in record. The communication in respect to GST compliance can be had without any hassle. In case such list is not handy then the same should be maintained and keep updated regularly. Additionally, it is also necessary to have in record the legal name of the supplier. Generally, the trade name is maintained in record but in GSTR-2A report legal name comes. In case trade name and legal name is different then it becomes difficult to identify the invoice in the dump and reconcile it. The identification can however be made based on GSTIN but obviously the person carrying out the reconciliation might also see the name of the supplier. Hence, it becomes essentials to keep such information in record.

The due date of GSTR-9/9A/9C for the financial year 2017-18 is extended till 30th November, 2019. In such case it happened that along with the preparation of annual return and reconciliation of FY 2017-18, the preparation for FY 2018-19 to the extent of GSTR-2A is required to be carried out. In order to become free from FY 2017-18 compliance, a taxpayer may prefer to complete the work of FY 2017-18 return filing first and file it and then start with FY 2018-19 compliance work. However, the sequence need to be changed, in my view. The reason is filing of annual return for the FY 2017-18 is 30th November, 2019 and the last date to carry out change in invoice/debit note pertaining to FY 2018-19 in GSTR-1/ GSTR-3B for the month of September 2019 is 11th October 2019/20th October 2019.

The reconciliation of GSTR-2A of FY 2018-19 should be carried out on priority preferably from 1st of September 2019. Lot of experience must have gained by the taxpayer from the working of FY 2017-18 which can be implemented in the second year working. Lot of communications would have happened with the supplier and customer and hence for the reconciliation of second year data should be a litte challenge. The consequence /financial impact which has happened to be paid in DRC-03 by the taxpayer in filing annual return for FY 2017-18 can be highlighted to the respective suppliers. A need for collaborative approach is felt by both taxpayer and the supplier.

A taxpayer can give a thought to carry out reconciliation of GSTR-2A report for FY 2019-20 on an ongoing basis. As a self start move he can carry out monthly reconciliation which will help them a lot during the filing of annual return. Instead of waiting for the Government to make it mandatory, we should take up the task proactively and carry out monthly reconciliation as a proactive measure.

(Please send feedback to <[email protected]>. Please also visit www.onlinetaxupdate.com.)

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35 Comments

  1. latha says:

    good afternoon sir, i have not taken credit of rent bills from the beginning, i.e. from july 2017. pls inform can i take the credit of all the bills till date in the month of september 2020

  2. Vivek says:

    Dear Sir,

    I need your help, Actually i have filed GSTR-3B for the FY-2018-19 in the m/o JAN-2020 with late fee and now i have received notice from department inadmissible ITC. Show Cause Notice under section 73

    Please guide what to do.

    1. Manish shah says:

      I Filed GSTR 3B forJuly 18to Sept 18 in Cece 20 with payment of interest tax and Late fees.
      But officer Denying ITC and send notice for ITC Reversal.
      So Pl Guide us

  3. HARISH says:

    Hello Sir,
    I have ITC around 4 lakhs for the financial year 2018-2019, Which is supposed to be claimed before 30.09.2019, which is not claimed. Can we claim the the ITC now, I had not filed my Annual return yet for the FY 2018-2019.

  4. Shrinivas says:

    Iam issue service invoice in march19 but receipant is taken credit inapril 19 we arefiled the invoice in march 19 gstr1.so this invioceis mismatch in april19 whatwill be do pl.give sujeljestuon sir

  5. SANJAY says:

    SIR, AFTER READING OF ARTICLES PEOPLES ARE SUBMITTING THEIR DOUBTS OR RAISING QUESTION TO SEEK CLARIFICATION FROM YOUR EXPERTISE. I HAD READ ALL THE QUESTIONS SUBMITTED FROM AUGUST2019 TO AUGUST 2020. BUT WHERE IS THE ANSWERS OR SOLUTIONS ? PLEASE ATLEAST GIVE REPLY TO THIS QUESTION IN SAME ARTICLES COMMENT BOX.

  6. BUGGAIAH BUTTA says:

    I AM ADVOCATE AND TAX PRACTITIONER. THE TOTAL 3B RETURNS FOR THE FINANCIAL YEAR 2018-2019 FILED ON 28/07/2020 BY ADJUSTING THE ITC AVAILABLE . SHALL THE FIRM IS ELIGIBLE NOW TO AVAIL THE ITC OF 2018-2019 . PLEASE CLARIFY

  7. Rajesh says:

    Facts: 1) GSTR-3B of Apr 2018 to Sept 2018 filed in FY 2018-19; 2) GSTR-3B of Oct 2018 to Mar 2019 are yet to be filed; 3) There is ITC of period Apr 2018 to Sep 2018 not claimed in GSTR-3B of that period; 4) If GSTR-3B of Oct 2018 to Mar 2019 are filed now, can unclaimed ITC of Apr 2018 to Sep 2018 (for which GSTR-3B were already filed) be claimed now i.e. as on 7th July 2020 i.e. date of filing GSTR-3B for Oct 2018 to Mar 2019? Kindly advise.

  8. DOLLY RATHORE says:

    Hello sir.

    I have not filed 3B return of mar 19. i can taken ITC of dec 18. please suggestion relating to ITC taken or not of mar 19.

  9. Ramesh says:

    Hi Sir, I have provided services to a client in Dec 2019 and the client has paid me in Dec 2019 based on the invoices. I have however made new asset purchases for the company in May 2020 and would like to know if I can claim the GST refund now using the GST deduction of 2019 Dec? Please clarify

  10. KAROTI VENKATESHWARARAO says:

    2018-19 august 18 month input tax not taken,3b is nill filed, and gstr 1 filed with turnovers, now taken march 20 this input taken possible

  11. MOHAMMAD ARIF says:

    Sir my client filed gstr3B for Feb 19 and March 19 on 29.11.2019 now a notice has been received from the department to reverse ITc claimed in those returns as the same is contravention of section 16(4) of CGST Act
    According to me ITC has been claimed in the GSTR3B fof the months of Feb and March 19 only and not in the GSTR3B of October 2019 hence it is not a contravention of Sec 16(4) hope my interpretation is correct kindly give your opinion on this

  12. MOHAMMAD ARIF says:

    Sir my client filed gstr3B for Feb 19 and March 19 on 29.11.2019 now a notice has been received from the department to reverse ITc claimed in those returns as the same is contravention of section 16(4) of CGST Act
    According to me ITC has been claimed in the GSTR3B fof the months of Feb and March 19 only and not in the GSTR3B of October 2019 hence it is not a contraventio n of Sec 16(4) hope my interpretation is correct kindly give your opinion on this

  13. K.G.RAJUMONE says:

    A registered dealer could not file his gst returns for the Months Dec 2018 to march 2019 in time. He file his returns only on Dec 2019. His input claim for the Dec-2018 to March 2019 considered in the GST portal and issue mail for paying the ipt credit taken for Dec-18 to March 19 in DR 03. Due to his wife is in critically admitted in RCC on Nov 18 and she was died on Nov.19. Hence the delay occurred. Have any chance for getting exmeption for the repayment of IPT claim taken by him.

  14. K.G.RAJU says:

    A registered dealer could not file his gst returns for the Dec 2018 to march 2019 in time. He file his returns only on Dec 2019. His input claim for the Dec-2018 to March 2019 considered in the GST portal and issue mail for paying the ipt credit taken for Dec-18 to March 19 in DR 03. Due to his wife is in critically admitted in RCC on Nov 18 and she was died on Nov.19. Hence the delay occurred. Have any chance for getting exmeption for the repayment of IPT claim taken by him.

  15. Weifore Cables Pvt Ltd says:

    by mistake any invoice has left to take input tax credit then what is the end time to take credit for that particular invoice

  16. namdeo danane says:

    can customer take input credit after sep-2019 towards debit note of tax difference amount of invoices raised in FY 2018-19. is there any notification for extension of input credit of FY 2018-19 after sep-2019

  17. Arpit says:

    I have claimed certain credit in my GSTR 3B for FY 17-18 based on the invoice received by me which enlists my GSTIN. However, the supplier posted the invoice in B2C category in his GSTR 1 and i did not received the credit. The time limit for correction of the invoice for FY 17-18 has also elapsed. To give me the credit of GST paid by me the supplier raised a fresh invoice in May 2019 and filed it in his GSTR 1 for which i received the credit in GSTR 2A. My questions are as under;

    1. Should i claim the credit in GSTR 3B basis the new invoice and reverse the credit claimed in FY17-18 (For the new invoice neither any payment is made by me nor posted in my books. However, for original invoice the entry is made and payment made) Or

    2. Should i pay the tax with interest for FY17-18 in DRC 03 and claim credit of new invoice in FY 19-20.

    OR

    3. Should i pay tax with interest in DRC 03 for missing credit in GSTR 2A and forego my credit for new invoice issued by supplier as no payment is made now

  18. Amitabha Mukherjee says:

    If we find that in GSTR 2A , entry is there, but in our GSTR 3B , we not posted, as we not reced proper documents . in that case whether we can avail credit on the basis of GSTR 2A, w/o having any documents.

  19. Ujjwal Mukhopadhyay says:

    Opinion is sought regarding the following:
    1. In case suppliers missed to upload any invoice in GSTR 1 for F.Y. 2018-19, and uploaded in GSTR 1 for September 2019, it will not be effected in GSTR 9 for F.Y. 2018-19.
    Question is whether the difference in ITC for F.Y. 2018-19 as reflected in books and per GSTR 9 is required to be paid at the time of submission of GSTR 9?
    Another question is whether such differences in ITC can be utilised in F.Y 2019-20?

    2. Ifany amount of ITC for 2018-19 has been claimed wrongly is it required to reverse such ITC in GSTR 3B and to be paid before submission of GSTR 3B relating to September 2019?
    Regards,
    Ujjwal Mukhopadhyay,

  20. sivaraman says:

    sir thanks for the information provided in this article time limit for claiming itc in gst for the fy 2018-19 . it is very useful and timely information

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