Be Careful When You File GST! This Error Can Lead To A Fine

GST: In a circular, the CBIC clarified that a taxpayer has to ascertain the eligible input tax credit from form GSTR-2A, which gets auto-populated by the virtue of a supplier filing its GSTR 1 form

The government on Monday clarified that it is the responsibility of the taxpayer to ensure that they do not claim more than 20 per cent of the eligible input tax credit (ITC) with respect to invoices which have not been uploaded by the suppliers.

In a circular issued on the subject of claiming ITC on invoices not uploaded, the Central Board of Indirect Taxes and Customs (CBIC) clarified that a taxpayer has to ascertain the eligible input tax credit from form GSTR-2A, which gets auto-populated by the virtue of a supplier filing its GSTR 1 form.

GSTR 1 form includes invoice details of all the sales a company makes. The entries made in GSTR 1 by the supplier get automatically reflected in the purchaser’s GSTR 2A, which has details of all the purchases made by a company.

As the GSTR-2A is dynamic, the credit appearing on the last date of filing of GSTR-1 should be considered for claiming ITC, clarified the circular.

Now that the tax authorities have clarified that it is the responsibility of the taxpayers to ascertain the eligible input tax credit, any claims exceeding the prescribed limit may result in interest and penalty.

Pritam Mahure, a chartered accountant, says: “GST is a self-assessed law, and the onus to follow the rule is on the GST payer. Given this, any non-compliance with the new rule may result in additional liability of interest and penalty.”

It also clarified that the 20 per cent restriction on claiming ITC should be on a consolidated basis and not on a supplier basis, that is, all eligible ITCs against all suppliers. However, those invoices against which ITC is not available as per some provisions of the GST would not be considered for calculating 20 per cent of the eligible credit available.

It was also clarified that the restriction of 20 per cent doesn’t apply to IGST paid on import, reverse charge mechanism and credit transfer through input service distributor.

The government had recently restricted availing of input tax credit to 20 per cent on goods and services received by a taxpayer but whose invoices have not been uploaded (on the GSTN website) by the suppliers of the goods and services. This was an attempt to plug revenue leakages.

The government has been struggling to achieve its GST revenue targets with monthly collections in August and September falling short of collections in corresponding months last year