Restrictions on availment of ITC as per GSTR-2A/2B from 1st, January 2022.

Availment of ITC as per GSTR-2A/2B

The taxpayer had been allowed to claim ITC based on the 4 conditions mentioned in section 16.
However, in section 16 of the Central Goods and Services Tax Act, in sub-section (2), after clause (a), CBIC has inserted 5th condition via clause (aa) namely, “the details of the invoice or debit note referred to in clause (a) has been furnished by the supplier in the statement of outward supplies and such details have been communicated to the recipient of such invoice or debit note in the manner specified under section 37”.
Now, this provision will apply from 1st Jan 2022, and 100 percent invoice matching with GSTR 2A will come into place.

On which basis taxpayer used to claim ITC till date?

Till date, taxpayers used to claim ITC based on either of the following two methods –

  • ⦁ Method 1: Claim ITC in return for that period to the extent of appearing
    in GSTR 2A.
  • ⦁ Method 2: Claim Full ITC based on amount appearing in the purchase
    invoice booked.

Now taxpayers will be allowed to take ITC only to the extent of the amount appearing in GSTR 2A.

What are the reasons due to which ITC of the genuine taxpayer can be disallowed because of insertion of the above new clause?

Following are the reasons due to which ITC of the genuine taxpayer can be disallowed:

  • ⦁ Your supplier has not filed GSTR 1 within the due date.
  • ⦁ Your supplier has filed GSTR 1 but mentioned the wrong GST number.
  • ⦁ Your supplier has filed GSTR 1 but mentioned the transaction as B2C instead of B2B.
  • ⦁ Many more reasons which are not in control of taxpayer.

What action department can take if any taxpayer claims ITC in excess of appearing in GSTR 2A?

⦁ The GST department has already started issuing a notice in the Form of ASMT 10 for FY 2017-18 and FY 2018-19 against the dealer who has claimed excess ITC than that appearing in GSTR 2A / Table 8 of GSTR 9. Such notices have been sent to all dealers by mail and are also available on the GST portal. The notice needs to be replied to, otherwise, the GST department can recover the tax along with interest and penalty.

What care should be taken by the taxpayer?

⦁ Now it is the responsibility of every taxpayer to check whether the supplier is filling GSTR 1 accurately and in a timely manner and after the auto-population of GSTR 2A of the following month the taxpayer shall reconcile ITC on purchases accounted in books with ITC reflected in GSTR 2A. If the same is not reflected in GSTR-2A, then a follow-up must be taken by the taxpayer with the supplier so that the same can be availed by the taxpayer.

Our previous article on the same issue –

Documents Required for filing Income Tax Returns of Salaried Individual in India

Key Docs Required for filing Income Tax Returns of Salaried Individual –

  • ⦁ Form 16 – Issued by the employer.
  • ⦁ Income Tax Login Details – Required to upload the return and check form 26AS for any other income and its correctness.
  • ⦁ In case home loan is taken from a bank or financial institution, then a housing loan interest statement is required.
  • ⦁ In case trading/investment is made in shares or mutual funds, then – Profit and loss statement for the year or capital gain report (used by some broker) is required.
  • ⦁ Details of NSC / KVP or any other investment made under section 80C – It includes any life insurance premium,, any Tax saver FDs, Public Provident Fund, etc.
  • ⦁ Form 16A is issued by banks in case there is a Fixed Deposit.
  • Health insurance premium receipts.
  • Investment details in NPS.

Other than this, some case-specific documents include –

  • ⦁ In case a property is sold, then a sale deed & purchase deed is required for tax calculations.
  • ⦁ Currency / Commodity trading P&L.
  • ⦁ Future & Options Trading P&L.
  • ⦁ Rental Income – Rent Agreement is advised in this case.

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