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ITC reporting in GSTR-9: GSTR-2A reconciliation, Challenges & clarifications

Updated on :  

08 min read.

The taxpayers must carefully verify the correctness of the information being reported in the GSTR-9. Moreover, the GSTR-9 annual returns once filed cannot be revised for the details reported therein. On the other hand, the auditors have the responsibility to give a true and correct opinion/certification on whether the criteria laid down under the GST law have been duly complied by the registered persons.

The input tax credit (ITC) forms an essential factor for a taxpayer to consider reducing his liability to an optimal level. Hence, many taxpayers are concerned about the treatment to be followed in case they have claimed more ITC in the GSTR-3B returns for FY 2017-18 when compared to GSTR-2A for FY 2017-18 as generated on 1 May 2019. Note that the ITC for FY 2017-18 can no longer be claimed freshly in GSTR-9.

Latest Update

16th November 2022
Changes are made in the format of GSTR-9 (annual returns), to mention the period after the FY 2021-22 as ‘April 2022 to October 2022 filed up to 30th November 2022’ instead of ‘April 2022 to September 2022’ in various tables.

The government has, on several occasions, given clarifications to reduce ambiguities in the annual return filing. However, the complexities surrounding a decision taken by taxpayers whether to declare something or not are still not wholly addressed. Such decision-making is required after performing the reconciliation of GSTR-2A with GSTR-3B or purchase books. One of the popular questions that strike them is whether or not to reverse and pay for the ITC that the business has claimed, despite not reflected in GSTR-2A. It takes sufficient time for the businesses to make this critical decision as they must be prepared for the penal consequences that can follow their choice to claim ITC. Some of the prevalent issues about ITC claims that are faced by businesses while filing GSTR-9 and solutions are as follows:

Reporting IGST credit claimed in 18-19 on goods imported in 17-18

There is no separate field in Table 8 to declare the IGST credit on import of goods for 17-18, claimed in 18-19. Taxpayers were worried they might lose out the IGST credit availed in 18-19 but related to 17-18 completely for not being declared in GSTR-9. However, the government has clarified that such credit for July 2017 till March 2018 which has been claimed in the financial year 2018-19 be reported in Table 6(E) of the GSTR-9 form.

Input tax credit on purchases and expenses for April 2018-March 2019

The government has clarified that the ITC availed in April 2018 to March 2019 but pertaining to invoices belonging to FY 2017-18 can be declared in Table 8C of the GSTR-9. Further, it would require reporting in Table 13 of GSTR-9 as well if the same is accounted in the books of accounts but credit was claimed in FY 2018-19.

The results of GSTR-2A vs GSTR-3B for FY 2017-18 in GSTR-9

ITC available in GSTR-2A but were never availed/ineligible in GSTR-3B is arrived at in Table 8D of the GSTR-9. The Government has clarified in the recent press release – “The input tax credit which is declared/computed in Table 8D is basically credit that was available to a taxpayer in his FORM GSTR-2A but was not availed by him between July 2017 to March 2019. The deadline has already passed and the taxpayer cannot avail such credit now. There is no question of lapsing of any such credit since this credit never entered the electronic credit ledger of any taxpayer.

Therefore, taxpayers need not be concerned about the values reflected in this table. This is merely information that the Government needs for settlement purposes.” However, the figure in this table becomes negative if the credit in GSTR-3B was more than the ITC available in GSTR-2A/GSTR-2B. The revised forms notified on 31 December 2018 has excluded the words “Out of 8D” in both Table 8E and Table 8F in comparison to the forms notified on 4 September 2018. Owing to this whether 8D is positive or negative will not make any difference. Thus, without having nexus to what gets reflected in 8D, what needs to lapse could be bifurcated into two categories. -8E – ITC available but not availed – The credits reflecting in GSTR-2A which was not availed from July 2017 to March 2019 and hence the time limit for availing the same has lapsed. -8F – ITC available but ineligible – The credits which are not eligible under the law like the blocked credits etc. A taxpayer can face a primary question of whether the non-reflection in GSTR-2A make their credit claims ineligible. Another question may arise on whether mere reflection in GSTR-2A without compliance with the other conditions can enable businesses to claim credits? There are cases where GSTR-1 has been filed by the businesses without making payment of taxes in GSTR-3B. Similarly, there are cases where taxes have been paid in GSTR-3B but the corresponding reporting in GSTR-1 has not been happened due to reasons like treating them as B2C instead of B2B. As per the provisions of the GST law as it stands on this day, certain conditions are to be fulfilled for availing the credits and once the same has been complied with the reflection in GSTR-2A or otherwise should not have an impact.

Section 16 of the CGST Act read with rule 36 allows a recipient to claim ITC provided he satisfies some conditions. He should have received the goods or services and also have a GST compliant tax invoice/other prescribed documents for the supply in hand. Again another important condition laid out in the above provisions is that the taxes should have been paid to the government.

Many have considered proceeding without now reversing the ITC in GSTR-9, on the basis of the above GST provisions. In any case, it is advisable for businesses to collect a tax paid confirmation letter from their suppliers so that they get a written assurance that taxes have been paid & hence their eligibility to credits be substantiated.

Table 6B is not the same as Table 6H of GSTR-9

Table 6B needs a declaration of inward supplies on which ITC is claimed successfully and was never reversed and reclaimed anytime. Whereas, the table 6H needs declaration of those inward supplies where ITC was availed once and reversed and reclaimed later. In either of the tables, there cannot be overlapping of figures. ITC reconciliation When the taxpayer conducts reconciliation or matching between GSTR-2A and GSTR-3B /purchase books, following are the four buckets of classification of the results:

  • Matched- Taxpayers do not have to bother
  • Mismatch found
  • Only in purchase books/GSTR-3B
  • Only in GSTR-2A

Note: – Taxpayers tend to focus more on the mismatches, and they check the cost of such rectifying such mismatch and the resources needed to rectify it.

Case study to determine the reporting of ITC summary in GSTR-9

Scenario 1: Where the ITC in GSTR-3B is more than GSTR-2A

Illustration 2 – 3B>2A

8ACredits as per GSTR-2A1,50,000  
8BCredits as per GSTR-3B1,60,000  
8CAvailed in 2018-1912,000  
    Reconciliation for difference   
8ECredits available in 2A but not claimed2,500 
8FCredits available in 2A but ineligible15,500 
 Credits not reflecting in GSTR-2A40,000Nowhere to be shown in GSTR-9. Need to follow up with vendors for tax payment confirmation. However, taxpayer can still proceed to claim without reversal on the basis of Section 16 of the CGST Act, provided ITC is eligible.

Scenario 2: Where the ITC in GSTR-3B is less than GSTR-2A

Illustration 2 – 3B<2A

8ACredits as per GSTR-2A2,00,000 
8BCredits as per GSTR-3B1,60,000 
8CAvailed in 2018-1912,000 
  Reconciliation for difference   
8ECredits available in 2A but not claimed2,500 
8FCredits available in 2A but ineligible15,500  
  Unknown Credits in 2A-10,000Nowhere to be shown in GSTR-9. It could be tax credits that do not pertain to your GSTIN.

Thus, we can conclude that businesses need not reverse any ITC claimed in GSTR-3B that have not been found as reported in GSTR-2A. However, while making this decision, businesses must check if they are backed by a compliant GST invoice/prescribed document for the purchase and have received the supply. The procurement of tax paid confirmation letters would also help in substantiating their claims. However, there could be litigation especially in large claims, in which case they must be ready to cough up huge interests and/or face any adverse legal consequences in the form of penalties, etc.

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