Difference in Input Tax Credit (ITC) as per GSTR-3B vs GSTR-2A for FY 2017-18 and 2018-19

The government released the new CGST Circular 183/15/2022 on 27th December 2022, clarifying the availability of Input Tax Credit (ITC) claimed in the GSTR-3B but missing in the GSTR-2A for FY 2017-18 and 2018-19. 

This new guidance will provide greater clarity and understanding for taxpayers on how to correctly claim ITC and ensure compliance with tax laws while avoiding litigations.

To whom does the Circular apply?

The CGST Circular applies to the following class of recipients who have claimed ITC for FY 2017-18 and FY 2018-19 in their GSTR-3B without it appearing in the GSTR-2A where-

• The vendor did not file GSTR-1 but filed GSTR-3B.
• The vendor filed GSTR-1 and GSTR-3B but did not show a particular invoice in GSTR-1.
• The vendor wrongly recorded the B2B invoice as a B2C invoice in the GSTR-1. 
• The vendor filed GSTR-1 mentioning the wrong GSTIN (For example, Tata received service from vendor A. While filing the GSTR-1, vendor A had mentioned the GSTIN of Reliance instead of Tata.)

Note: Not applicable to the deadline given in proviso of Section 16(4) of the CGST Act.

Conditions to be satisfied to allow the ITC claims

The Circular reiterates the following conditions from Section 16(2) for allowing ITC claims-

1. Buyer has received goods/services 
2. Buyer possesses the corresponding invoice or debit notes 
3. The buyer has paid for the invoice
4. Evidence is available confirming that the supplier has deposited taxes and filed GSTR-3B with the corresponding invoice or debit notes-

Note: Points A, B, and C are old conditions given in GST law, whereas condition D is a relaxation given by the Circular in line with the recently added provision Section 16(2)(c) of the CGST Act.

*Certifying that supplies are actually made by the vendor to the buyer, and the tax on it has been paid by the vendor in their GSTR-3B. 

Other requirements that the Circular mention is that the ITC reversals must have been carried out in compliance with Section 17 (Apportionment of credit and blocked credits) and Section 18 (Availability of credit in special circumstances). Further, the ITC must have been claimed within the timeline given under Section 16(4).

How can Clear help?

The advanced Clear GST solution provides you with the following quintessential features to smoothly stay in compliance with this Circular-

• End-to-end GSTR-2A vs PR reconciliation for FY 2017-18 and 2018-19 and identify-
  • Invoices related to vendors who did not file GSTR-1 but filed GSTR-3B
  • Invoices that are not reflected in GSTR-2A due to the wrong GSTIN being mentioned, but the vendor has filed GSTR-1 and GSTR-3B
• Preparation of supporting documents for the CA/CMA Certificate 
• Preparation of supporting documents for Vendor Certification 

Why should you act now?

• The government recently issued 50,000 GST notices, and the above differences for 2017-18 exist for almost all companies. Therefore companies who got notices need to perform reconciliation and arrange for the certification. 
• Even if you haven’t received the notice for audit/scrutiny/investigation, it is better to keep the documentation ready to evidence genuine ITC claims during departmental proceedings.