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

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

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Latest Updates

1st February 2022
Budget 2022 updates-
1. ITC cannot be claimed if it is restricted in GSTR-2B available under Section 38.
2. Time limit to claim ITC on invoices or debit notes of a financial year is revised to earlier of two dates. Firstly, 30th November of the following year or secondly, the date of filing annual returns.
3. Section 38 is completely revamped as ‘Communication of details of inward supplies and input tax credit’ in line with the Form GSTR-2B. It lays down the manner, time, conditions and restrictions for ITC claims and has removed the two-way communication process in GST return filing on the suspended return in Form GSTR-2. It also states that taxpayers will be provided information of eligible and ineligible ITC for claims.
4. Section 41 is also revamped to remove the references to provisional ITC claims and prescribes self-assessed ITC claims with conditions.
5. Sections 42, 43 and 43A on provisional ITC claim process, matching and reversal are eliminated.

29th December 2021
CGST Rule 36(4) is amended to remove 5% additional ITC over and above ITC appearing in GSTR-2B. From 1st January 2022, businesses can avail ITC only if it is reported by the supplier in GSTR-1/ IFF and it appears in their GSTR-2B.

21st December 2021
From 1st January 2022, ITC claims will be allowed only if it appears in GSTR-2B. So, the taxpayers can no longer claim 5% provisional ITC under the CGST Rule 36(4) and ensure every ITC value claimed was reflected in GSTR-2B.

What Is Section 43A?

Section 43A has been 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 this 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 was the New & Simplified Return Scheme?

Under the proposed new scheme that later got suspended, every registered taxpayer would 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 operationalises the new GST return procedures that are currently suspended. 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 the 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, which can be claimed then 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. However, note that it is not notified and hence currently not applicable.

Currently applicable provision in absence of notifying Section 43A?

Taxpayers must claim ITC in their GSTR-3B only to the extent of the amount appearing in their GSTR-2B/GSTR-2A. This has been outlined in the provision of Section 16(2)(aa) of the CGST Act with effect from 1st January 2022. Until then, taxpayers could claim 5% additional ITC along with ITC appearing in GSTR-2B while filing GSTR-3B.

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