We have discussed a lot about Input Tax Credit in our previous blogs, a lot of related topics a...
Goods and Service Tax in India is more unique than all other countries. Dual tax administration has been introduced under GST, keeping in mind the federal tax system by the Indian constitution. IGST Concept on interstate supply of goods and services has been introduced and a requirement of matching ITC (Input Tax Credit) has been set as a most important procedure under GST Act, as it is difficult to track an invoice with an input tax credit.
Under the GST Act, apart from transferring the goods, there should be an actual Passover of ITC (Input Tax Credit). This process will ensure that ITC can be claimed only if it has been confirmed by the counterparty. The concept of matching ITC (input tax credit) has been introduced from Existing VAT Laws. ITC can be only claimed if invoice of supplier and recipient is matched. This is also invoice matching under GST.
Following details/returns have to be furnished with goods or services. The following details needs to be furnished as per the advisory from the GST Council.
|GST Return form||Responsible party||Required declaration|
|GSTR-1||Supplier (Seller)||Invoice wise details of outward supply|
|GSTR-2A||Auto-populated from GSTR-1||Auto-populated based on supplier return|
|GSTR-2||Recipient||In this form recipient can add or delete Input tax credit item|
|GSTR-1A||Auto-populated by Supplier||The supplier can amend or can add delete outward tax item as per the goods or services received by the recipient|
|GSTR-3||Supplier and recipient||Matching of ITC only after the due date of furnishing the return GSTR-1 & GSTR-2|
After online submission of GSTR-3, the common portal will verify the GSTIN of the supplier, GSTIN of the recipient, invoice number or debit note number, invoice date or debit note date, the taxable value of supply goods or services, and the tax amount (separate details for CGST, IGST & SGST).
The claim of ITC would be deemed as matched in the following case:
Discrepancies in ITC may be communicated by the recipient in GST MIS-1 when the ITC claim is in excess than the tax amount declared by the supplier or supplier has failed to declare the supply made to the recipient, and discrepancies in ITC can be reported by the supplier in GST MIS-2 if there is duplication in claim by the recipient.
The rectification of the discrepancies can be either done by the supplier by filing correct outward returns and matching with goods or services received by the Recipient or Recipient on his own motion. The discrepancies may be deleted or correct the details of an outward supply matching with an outward supply can be made by the supplier.
If after communication by the recipient about the discrepancies in ITC, the supplier does not initiate any correction in such circumstances or the ITC amount extends to such discrepancies, it should be added to the output tax liability of the recipient. The additional tax liability along with interest will be applicable at the time of filing of GSTR-3.
The recipient output tax liability may be reduced when the supplier admits the invoice or debit note is claimed in the monthly return within the specified time period. When there is an admission of the tax liability by the supplier, then the recipient shall be entitled to a refund of excess tax paid along with interest. Interest will be added by the GST Registration Department on account of a supplier. This will eliminate the Cascading effect of taxes and will, as a result, decrease the liability of the recipient.
As stated earlier the concept of matching ITC (input tax credit) has been introduced from existing VAT Laws. If you have any query related to GST or related laws feel free to contact Enterslice.
Read our article: Filing of Form GST ITC-03: All you need to know