All you want to know about changes in GST rules to claim input tax credit


by 5paisa Research Team Last Updated: Dec 29, 2022 - 10:13 am 5.4k Views

If you run a business that pays Goods and Services Tax (GST), this news is for you. 

GST taxpayers will be required to reverse by November 30 the input tax credit (ITC) claimed in the last fiscal year in case their suppliers fail to deposit the due tax by September 30, the Finance Ministry has said.

The taxpayers, however, can reclaim the ITC later following the deposit of taxes by the supplier.

What rule has the ministry actually inserted?

The ministry has inserted Rule 37A in Central Goods and Services Tax rules to give effect to the new provision.

What has the ministry actually said?

"Where input tax credit has been availed by a registered person..., but the return in Form GSTR-3B for the tax period corresponding to the said statement of outward supplies has not been furnished by such supplier till September 30..., the...input tax credit shall be reversed...on or before November 30 following the end of the such financial year," the ministry said.

So, why is this important?

A report by the Press Trust of India, citing a KPMG expert, said that the insertion of Rule 37A merits attention as the same provides for the instances and the manner where ITC is required to be reversed in case of non-payment of tax by the supplier.

What have other experts said on this change?

Another expert with AMRG & Associates said that it is a prospective change only that will not curate any benefit till fiscal 2021-22. Secondly, very few cases will be able to qualify the conditions stipulated in these rules. 

An EY expert said that while the GSTR 1 would capture the details of supplies made by the seller to multiple buyers, it would be very difficult for the buyer to ascertain whether the tax has been discharged by the seller on GSTR 3B against their invoices or not as the said return doesn't capture invoice wise tax payment.

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