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A user faces many issues relating to settlement, disclosure, etc, of Input Tax Credit (ITC) at the time of GSTR 9 Annual Return Filing. We provide you with a comprehensive solution to all such queries you have been witnessing so far.
GSTR-9 is an annual return mandated for all GST-registered taxpayers. This crucial document provides a year-end summary of all business transactions as follows:
GSTR-2A Reconciliation is the process of matching the invoices available in the GSTR-2A form with the invoices recorded by a business in its books. This process helps businesses identify discrepancies between the data reported by suppliers and the data recorded by the recipient of the supplies.
The GSTR-2A form is an auto-drafted statement that contains details of purchases made by a taxpayer from registered suppliers. It is generated based on the information provided by suppliers in their GSTR-1 forms. By reconciling GSTR-2A, businesses can ensure the accuracy of their Input Tax Credit (ITC) claims, maintain compliance with GST regulations, and avoid potential penalties.
Regular reconciliation helps in:
Under the GST law, claiming Input Tax Credit (ITC) is subject to specific conditions, regardless of the information reflected in GSTR-2A.
Section 16 of the CGST Act, in conjunction with Rule 36, outlines the eligibility criteria for ITC:
To ensure a robust defense for ITC claims, businesses are advised to obtain a "tax-paid confirmation letter" from their suppliers. This letter serves as written proof of tax payment to the government, strengthening the recipient's claim for ITC.
Significant discrepancies often arise between the Input Tax Credit (ITC) reflected in auto-generated GSTR-2A and the ITC reported in GSTR-9. Key reasons for these mismatches include:
To help you ensure accurate input tax credit reconciliation, we've compiled the following tips:
Consult tax professionals for assistance with complex ITC reconciliation and accurate annual returns.
The GST law does not provide for the reversal of credit under protest. Hence, there is no separate disclosure available in the Annual Return for the same. The registered person may file a separate communication with the jurisdictional officer for such reversals made, and no separate disclosure can be made in the Annual Return.
Circular No.26/2017 dated 29.12.2017 provides that such transactions can be rectified wherein the assessee needs to reverse the credit improperly availed and re-avail the correct credit through adjustments in the subsequent GSTR-3B, and correct credit needs to be disclosed under the appropriate heads under Sl. No.6 under Part III of the Annual Return.
Sl. No.8 under Part III appears to provide for disclosure of additional information required to be reported by the Assessee, with respect to matching of credit balances with Form GSTR-2A. There is no specific requirement for reversal of credit on account of invoices not reported in Form GSTR-2A. However, the details reported in Sl. No.8 would become the basis for the Department to determine in case of input tax credit availed in excess of credits reported in Form GSTR-2A.
Annual Return provides for reporting of such transactions that have been reported in the monthly returns. Credits availed in books of accounts and not reported in Form GSTR-3B shall not be reported in the Annual Return. Such credit would be reported in the GSTR-9C, and the difference has to be explained by the auditor.
Sl. No.8 under Part III, which requires disclosure of certain additional details, compares the credit reported under Sl. No. 6(B) and does not include IGST credit availed on the import of goods. Such credit has to be separately reported by the registered person.
The form provides for reporting of actual reversals made in Form GSTR-3B for the FY 2017-18. Reversals made during FY 2018-19 w.r.t. FY 2017-18 would be required to be reported as part of the Annual return for FY 2018-19.
Credits in annual returns are reported on the basis of GSTR 3B filed by the taxpayer under Part III Sl. No.6. Later, if an assessee finds some other credits missed to be claimed as per GSTR 2A, and the same matches with his own records. It shall be reported in GSTR 3B till the month of September.
The credits shall always be supported by a copy of the invoice or equivalent document. In the absence of this, the taxpayers may not be allowed to avail of the ITC.
Yes, Sl. No.6 under Part III requires the bifurcation of input tax credit availed under inputs, input services, and capital goods.
