Matching Reversal Claim of GST Input Tax Credit, Matching of GST Input Output Tax Credit, Reversal of GST Input Tax Credit, Reclaim GST ITC
Matching Reversal Claim of GST Input Tax Credit : The following details relating to the claim of input tax credit on inward supplies including imports, provisionally allowed under section 41, shall be matched under section 42 after the due date for furnishing the return in FORM GSTR-3:
- Goods and Services Tax Identification Number of the supplier;
- Goods and Services Tax Identification Number of the recipient;
- invoice or debit note number;
- invoice or debit note date; and
- tax amount:
Provided that where the time limit for furnishing FORM GSTR-1 specified under section 37 and FORM GSTR-2 specified under section 38 has been extended, the date of matching relating to claim of input tax credit shall also be extended accordingly:
Provided further that the Commissioner may, on the recommendations of the Council, by order, extend the date of matching relating to claim of input tax credit to such date as may be specified therein.
Explanation.- For the purposes of this rule, it is hereby declared that –
(i) The claim of input tax credit in respect of invoices and debit notes in FORM GSTR-2 that were accepted by the recipient on the basis of FORM GSTR-2A without amendment shall be treated as matched if the corresponding supplier has furnished a valid return;
(ii) The claim of input tax credit shall be considered as matched where the amount of input tax credit claimed is equal to or less than the output tax paid on such tax invoice or debit note by the corresponding supplier.
The details in a return of inward supplies of a recipient should be matched in prescribed time and manner with:
- Outward supplies furnished by other party (supplier)
- Additional customs duty paid on goods imported
- Any duplicate claims of input tax credit
When the credit availed by the recipient matches with the above, the same shall be finally accepted and communicated to the recipient in the prescribed manner. Where the credit claimed is in excess in respect of inward supplies compared to the tax declared by the supplier, the discrepancies will be communicated to both parties. But discrepancies involving duplication of the credit claim by the recipient will be communicated to the recipient.
Discrepancies communicated to the outward supplier are not rectified by supplier in a valid return subsequently (not by revision of return for the month in which the discrepancy occurred). Since the outward supplier has not admitted the discrepancy, the tax amount involved will be added to the output liability of the recipient for the month in which the discrepancy is communicated. And if the supplier accepts the discrepancy and rectifies the same by filing a valid return subsequently, then the tax amount involved will be excluded from the output liability of the recipient for the month in which the discrepancy is communicated. In other words, as soon as discrepancy is communicated, the tax involved will be recovered from the recipient which will readily be reversed when the outward supplier admits and rectifies the discrepancy.
Discrepancies relating to duplication of credit will be added to the output liability of the recipient for the month in which the discrepancy is communicated.
Recipient will be liable to payment of interest in every case when discrepancy is added and interest will be paid on reversal of the liability added earlier after due rectification by the outward supplier. Refund provisions under section 38 are not to be applicable and the reversal of interest and this refund will be credited into the electronic cash ledger in prescribed manner. Interest paid that is reversed to the recipient will not exceed interest recovered from the supplier. Reference may be had to the discussion under section 29A which discusses this aspect of payment of interest by the supplier.
Any reduction of liability by the recipient in contravention of the provisions will be added to the output liability of the recipient and recovered along with applicable interest.
Example – 1
A Ltd supplies manufactured goods to B Ltd for Rs 1000 in May 2017; CGST thereon is, say, Rs 120. Unfortunately A Ltd did not furnish these details in its outward supply to B Ltd.
While matching the credit, B Ltd failed to set this right and went ahead with credit claim and utilized the credit against CGST liability. Later, GST officer intimates this mismatch, say by August 2017. In the absence of A Ltd’s due response, B Ltd may pay back the credit with interest (for wrong credit).
A Ltd rectifies the outward return with details omitted earlier, in October 2017. Accordingly, B Ltd can certainly take back the credit earlier reversed.
Example – 2
A Ltd, the supplier failed to furnish right details in time. B Ltd the recipient of supply had to pay back the credit utilised for mismatching credit figures, with interest.
Of late, A Ltd has corrected its returns reflecting B Ltd’s name and interest for the same paid by A Ltd. B Ltd is entitled for the credit now; it is eligible to claim back the interest paid. This interest cannot exceed the interest paid by A Ltd.