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Section 43A – Procedure For Furnishing Returns & Availing Input Tax Credit

Updated on:  

08 min read

In this article, we will discuss about section 43A in detail.

Latest Updates

28th May 2021
CGST Rule 36(4) to cumulatively apply for April, May and June 2021 while filing GSTR-3B of June 2021.

1st May 2021
The CGST Rule 36(4) restricting provisional ITC claims to 5% of GSTR-2B in GSTR-3B is relaxed for April 2021. The taxpayer can apply this rule cumulatively for both April and May while GSTR-3B for May 2021.

1st February 2021
Budget 2021 update: Section 16 amended to allow taxpayers’ claim of the input tax credit based on GSTR-2A and GSTR-2B. Henceforth, the input tax credit on invoice or debit note may be availed only when the details of such invoice or debit note have 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.

22nd December 2020
Following are the changes in Rule 36(4) from 1st January 2021:
1. The ITC shall be available as per the invoices uploaded by respective suppliers either in their GSTR-1 or by using the Invoice Furnishing Facility (IFF).
2. The recipients can claim provisional input tax credit in GSTR-3B to the extent of 5% instead of earlier 10% of the total ITC available in GSTR-2B for the month.

Certain taxpayers cannot make payment from their electronic credit ledger in excess of 99% of the total tax liability for the tax period as per a new rule 86B.

3rd April 2020
The CBIC has notified that taxpayers can claim input tax credit in the GSTR-3B return from February 2020 to August 2020, without applying the rule of capping provisional ITC claims at 10% of the eligible ITC as per GSTR-2A.

While filing the GSTR-3B of September 2020, the taxpayers must cumulatively adjust ITC as per the above rule from February 2020. 

What Is Section 43A?

Section 43A has been recently added to the Central Goods and Services Tax Act, 2019 (CGST Act). This section deals with the procedure for furnishing returns and availing input tax credit. There have been various changes in the GST return reporting framework since the introduction of GST. The intent of inserting the new section is to merely operationalise the changes in the return reporting framework as and when the same is introduced by the CGST Rules. The GST Council in its 27th meeting had proposed this simplified return filing structure for taxpayers.

How Are GST Returns Currently Being filed?

Currently, taxpayers are filing two monthly GST returns – GSTR-3B and GSTR-1. As of now filing of GSTR-2 and GSTR-3 has been suspended.

What Is The New & Simplified Return Scheme?

Under the proposed new scheme, every registered taxpayer will have to file only one monthly return. The facility to upload invoices on a real-time basis will be made available. Suppliers can upload invoices anytime during the month before a cut-off and the invoices would be visible to buyers.

The buyers will be eligible to claim the credit on a self-declaration basis even if the supplier hasn’t uploaded all invoices during the interim period of transition. The new GST return scheme aims to simplify the return filing procedure to a great extent.

Key Points To Be Noted Under Section 43A

section 43A
  • Section 43A operationalises the new GST return procedures. The detailed guidelines in rules are yet to be notified. It is expected that these rules would be issued in due course so that the exact details would be available to taxpayers well in advance.
  • It should be noted that Section 43A begins with a ‘notwithstanding’ clause. This means that provisions of Section 43A will override: Section 16(2) of CGST Act [which states conditions for availing ITC] Section 37 of CGST Act [which deals with details of outward supplies] Section 38 of CGST Act [which deals with details of inward supplies].In a way, Section 43A intends to benefit taxpayers as it allows the taxpayer to avail ITC on a provisional basis in certain cases even if other conditions are not fulfilled. The CBIC has not yet notified how section 43A impacts GST returns filed.
  • Every registered person will be able to amend/add/delete the details of inward supplies in the monthly returns.
  • There will be a mechanism for availing of the input tax credit by the recipient even if the supplier does not provide adequate details in his returns, or if the details provided are incorrect. The recipient can avail ITC even if the supplier does not upload invoices. The credit available in such a case would not be more than 5% (earlier was 10% up to 31 Dec 2020 and prior that was 20%) of ITC available to the recipient on the basis of details uploaded by the supplier. Thus, the upper limit stipulated under Section 43A for availing ITC on a provisional basis is 5% (earlier was 10% up to 31 Dec 2020 and prior that was 20%). As the rules are yet to be notified, one can interpret the provision as follows:A recipient can claim a provisional input tax credit up to 5% (earlier was 10% up to 31 Dec 2020 and prior that was 20%) of the purchase invoices eligible for input tax credit, over and above the details already uploaded by the supplier. In this case, if the supplier has uploaded sales with ITC amounting to Rs. 1,00,000 for a period, the recipient can claim the input tax credit that shall not exceed Rs. 1,00,000 plus Rs. 20,000 for invoices not uploaded. Rs. 20,000 will be provisional ITC available for the invoices yet to be uploaded by the supplier, that can be claimed now but will be subject to invoice details uploaded later by the supplier.
  • The supplier and recipient can be jointly and severally liable to a) pay output tax b) pay ITC availed, if the return is not furnished but details of outward supplies have been uploaded to the portal for availing credit.
  • Recovery procedures for such output tax/ITC will be specified. However, if the amount involved does not exceed INR 1,000, the recovery proceedings can be waived off
  • Rules will be issued to provide details of the manner in which the details of outward supplies can be furnished in specified cases

Section 43A is important and much-needed relief to taxpayers and will reduce the concerns of the industry to a great extent.

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