Input tax credit is the tax paid on the purchase of goods or services which can be set off against the tax liability on the sales. The new GST return filing system is expected to make the process of filing regular returns and tracking ITC smooth and easier.
There have been several key amendments in the goods and services tax (GST) regime. As the new financial year is just around the corner, we thought we should update you on what’s changing, and what you should be concerned about.
As the process can be a little confusing, we bring to you a simplified step-by-step flow chart of what you should be adding and deleting from your GSTR-2B form to arrive at a much simpler and uncomplicated stage of claiming ITC in the GSTR-3B form.
DOWNLOAD GSTR-2B FORM
The form is usually available from the afternoon of the 14th of every month and can be downloaded from the URL www.gst.gov.in. Login to the GST Portal with valid credentials.
(1)
REMOVE INELIGIBLE ITC FROM YOUR GSTR-2B FORM
Any ITC that is unrelated and ineligible has to be removed from your GSTR-2B form. This includes goods such as motor cars, food, health insurance, gifts, capital expenses related to immovable properties, etc.
(2)
REMOVE THE ITC CLAIMED EARLIER
If you are claiming ITC on a provisional basis, then you need to ensure you do not claim ITC again, when the invoice is actually reported by your vendor and thus starts reflecting in your GSTR-2A and 2B. Also, the onus of identifying such invoices and adjusting the ITC amount in subsequent months is on the taxpayer.
Example:- Invoice dated 10-12-2021 ITC has taken in GSTR-3B of Dec-21, however, supplier disclosed same ITC recently and appearing in GSTR-2B of Jan-22
(3)
REMOVE GOODS THAT ARE TO BE RECEIVED IN THE COMING MONTHS
Irrespective of the date of invoice, if the goods are not received in the given month, you need not claim ITC in the GSTR-3B of that very month.
Example:– Invoice date 30-01-2022 and also appearing in GSTR-2B of Jan-22, however goods are received from company 5th Feb 2022, this ITC is to be claimed in GSTR-3B of Feb 2022
(4)
REMOVE ITC NOT RELATED TO THE BUSINESS FROM THE GSTR-2B FORM:
Earlier, in a chain of transactions, GSTIN of unrelated goods were also depicted in the GSTR-2B form, making things complicated and leading to la scope of loopholes. The new amendment now allows you to not include an unrelated GSTIN from your GSTR-2B form.
Example:- A sold goods to B, but in GSTR-1 shown GSTIN of D, Here D needs to remove ITC from is GSTR-2B
(5)
ADD IMPORT ITC TO BASED ON THE BILL OF ENTRIES FROM GSTR 2B FORM
If the bills have been entered already, but not all of them are being reflected in GSTR 2A/2B, the taxpayer can still claim the ITC of the remaining bills. The Goods and Service Tax Networks (GSTN) has now rolled out functionality to drag the data of Import ITC (from the Customs website) which is not reflected on the GST Portal.
Example:- In Jan 2022, 3 bills of entries are filled by the company, However in GSTR-2B of Jan only 1 bill of entries is reflected, the company can claim ITC of the remaining 2 bills of entries too in Jan 2022, even though it is not reflecting in GSTR-2B
(6)
ADD PENDING/UNCLAIMED/MISSED ITC
Several taxpayers miss claiming their transitional credit due to various reasons. Now, the transitional credit can be claimed at a later date as well, irrespective of whether there were any technical difficulties or not.
NOTE:
- The amendments in the GST Act, 2017 have been made to ease the process for taxpayers as well as to curb the loopholes in the taxing system, which is sometimes taken undue advantage of.
- This amendment also empowers tax officers to provisionally attach the property of a taxable person or any other person who is the beneficiary of the transaction, after the initiation of the proceedings. The powers of the tax authorities relating to the detention of goods during movement and confiscation have increased as well.
- Hence, it is extremely important to be very vigilant while filing the returns.
- We strongly recommend the reconciliation of your record books and GSTR-2B on a monthly basis.
DISCLAIMER: The following article is for information purposes only. We request you to kindly go through the Central Goods and Services Tax (CGST) Act, 2017 via the Finance Act, 2021, and its amendments.