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GST officers to seek details of all invoices in case of ITC mismatch

New Delhi, December 27, 2022

The CBIC issued circular clarifying guidelines on recovery proceedings for the period 2017-18 and 2018-19

GST officers will have to seek details of all invoices on which input tax credit (ITC) has been availed of by erring business in cases of mismatch in GSTR-1 and GSTR-3B before initiating recovery action for short payment or non-payment of taxes.

The Central Board of Indirect Taxes & Customs (CBIC) on Tuesday issued circular clarifying guidelines on recovery proceedings for the period 2017-18 and 2018-19. This is following the recommendations of the GST Council in its last meeting on December 17.

The taxmen should also check whether any reversal of ITC is required to be made by verifying certain aspects. For instance, if ITC claimed for the said financial year exceeds ~5 lakh, the officer concerned will ask the business to produce a certificate from the supplier certified by a chartered accountant. In case the credit is below ~5 lakh, a certificate from the supplier would work.

So far, under the GST law, show-cause notices were issued before a recovery process initiated in cases of mismatch in GSTR-1 and GSTR-3B.

The mechanism for matching of ITC as per GST law is designed to be carried out by combined filing of Forms GSTR-1, GSTR-2, and GSTR-3.

“The discrepancies between the amount of ITC availed by the registered persons in GSTR-3B and the amount as available in GSTR-2A are being noticed by the tax officers during proceedings such as scrutiny/ audit/ investigation, etc. due to such credit not flowing to GSTR-2A of the registered persons,” CBIC said in the circular.

Such discrepancies are considered by the tax officers as representing ineligible ITC availed by the registered persons, and are being flagged by them seeking explanation from the registered persons for such discrepancies and/or for reversal of such ineligible ITC, it said while giving reason for the clarification.

GST officers will have to seek details of all invoices on which input tax credit (ITC) has been availed of by erring business in cases of mismatch in GSTR-1 and GSTR-3B before initiating recovery action for short payment or non-payment of taxes.

The Central Board of Indirect Taxes & Customs (CBIC) on Tuesday issued circular clarifying guidelines on recovery proceedings for the period 2017-18 and 2018-19.

The guidelines followed the amendment the apex body issued on Monday, which said GST taxpayers will be required to reverse the input tax credit by November 30, claimed in the last fiscal year in case their suppliers fail to deposit the due tax by September 30. The taxpayers, however, can reclaim the ITC later following the deposit of taxes by the supplier.

[The Business Standard]

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