It is easy to guess that you are not fully GST compliant unless your ITC claims are in place. It is beneficial if businesses may have access to a report which specifies what % of their credit is unmatched and they’ll have to work with suppliers to minimise the gaps.
For issue of Scrutiny notices, what does mismatch in credit mean?
Several taxpayers are concerned about the issues around non availability of credit. Here’s basically what mismatched credit means –
- Differences between the amount of credit shown in GSTR- 3B and the GSTR 2A or/and
- Discrepancies between GSTR-3B and GSTR-1 or/and
- DIfferences in the provisional credit claimed and actual credit that is claimable. This situation arises usually during transition stages.
Any differences noticed between these returns will lead to scrutiny notices being issued to the taxpayers.
Modes of communicating differences noticed in the returns by officers
Any difference noticed by the authorised officer shall be communicated to the concerned person in FORM GST ASMT-10. Content of the form
- Observations of the officer
- Time available to the taxpayer to give his explanation in response to this notice.
- Tax amount that is different and is the reason for the discrepancy may or may not be mentioned in this form.
Actions available to taxpayers who receive notice
View Form GST ASMT-11 View Form GST ASMT-12.
Any differences between your monthly/quarterly/yearly GST returns? ClearTax won’t let you worry
As a one stop solution for various taxpayers regarding these notices we suggest to use our products. At ClearTax :
- GSTR 3B Vs GSTR 1 report is generated to help customers know about any differences connected to payment of taxes on all outward supplies
- A comparison report between the GSTR 3B and GSTR 2A is generated. This helps to be sure that the credits claimed are related to taxes actually paid by the suppliers.
- The invoicing cum filing platform fastens the invoice generation and return filing process with accuracy. Invoices created via ClearTax help in auto preparation of the GST returns and thus the chances for errors get reduced to almost nil.
- Multiple validations connected to GST are done. Checks of HSN code, tax rate. GSTINs, Place of supply, date format, deadline checks, etc, help in better compliance of requirements and early detection of any mismatches.
These intelligent reports help to capture ITC leakage before it impacts your tax payments and working capital.
Rectification of discrepancies
If a discrepancy arises, it can be rectified in the following ways:
Excess ITC claimed w.r.t. declaration by supplier or outward supply is not declared by the Supplier:
- In case of discrepancy of claim w.r.t. declaration by supplier in his valid return, such discrepancy shall be communicated to supplier and recipient. On receipt of such a communication, the supplier shall be asked to rectify the discrepancy in his valid return for the month in which discrepancy is communicated.
- If the supplier does not rectify the discrepancy, the excess ITC claimed earlier shall be added to the output tax liability of the recipient in the next month
For example: If the discrepancy is communicated in the month of July and not rectified by supplier, then the ITC claimed earlier shall be added to the output tax liability of the recipient for the following month of August.
Duplication of claim of ITC by recipient:
- In case of a duplication of claim, the recipient will be intimated about the duplication of claim. If a rectification is not made, then the ITC claimed earlier shall be added to the output tax liability of the recipient for the month in which duplication communicated
For example: Assuming that the intimation about the duplicate claim was sent in the month of July, the ITC claimed earlier shall be added to the output tax liability of the recipient in the month of July itself if the rectification is not made in time. In case of additions, the recipient shall be required to pay an interest not exceeding 18% on the amount added to the output tax liability from the date of availing the ITC till the additions are made in returns.
Re-Claim of ITC
- It means re-claiming the amount of ITC which was earlier reversed due to discrepancy in amount declared by supplier in his valid return or duplication of the ITC claim. Such re-claims can be made by the supplier only in case the supplier declares the details of invoice and/or debit notes in his valid return pertaining to the period in which the omission or incorrect particulars were noticed by the supplier, or the communication about the same was received.
- Any interest paid earlier on excess claim of ITC will be refunded by crediting the amount to the recipient’s Electronic Cash Ledger.
- In case of duplication of ITC claim, no refund will be allowed as it is a contravention of the GST provisions.
For example: Mr. Anand, the recipient, files his FORM GSTR-3 on 18th September 2017, for the tax period of August 2017. On matching, a discrepancy is found in the inward supply furnished by him in FORM GSTR-2 for Rs 10,000. The ITC claimed on this is Rs. 1,200. Now, this discrepancy is communicated to Mr. Anand and his supplier. The supplier refuses to make the rectification in his valid return. So, the availed ITC of Rs. 1,200 will be added to Mr. Anand’s output tax liability for the tax period of September 2017 and interest will be payable on this. Now, if the supplier rectifies the discrepancy through debit note or invoice within the specified time frame, Rs. 1200 will again be allowed as ITC and the amount paid as interest will be refunded.
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