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Input tax credit not reflecting in GSTR-2A, (1)

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Input tax credit not reflecting in GSTR-2A, (1)

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  1. Input tax credit not reflecting in GSTR-2A, can only be availed up to 5%

  2. ITC mechanism under GST • Input Tax Credit (‘ITC’) Mechanism under the Goods and Services Tax (‘GST‘) law is a critical success factor for the compliance and administration of GST law in India. Currently, taxpayers do not have a facility/ opportunity to review the invoices uploaded by their suppliers, corresponding to their ITC claims. Taxpayers are reliant on their financial records to collate the data and report the same in the Monthly Return GSTR – 3B. • The mechanism of having an invoice matching with automatic comparison and reconciliation for ITC as initially envisaged under the GST law could have been a game-changer. However, with the facility not yet being operational, GSTR – 2A has been merely a reporting platform without any facility/ opportunity to seek an amendment of the contents thereof

  3. Amendment by the CBIC as CBIC restrict ITC • While taxpayers continue to comply with this existing stop-gap arrangement notified by the Central Board of Indirect Taxes and Customs (‘CBIC’), the CBIC has recently issued a Notification No. 49/2019 – Central Tax dated 9 October 2019 and further notifications, seeking a curtailment/ restriction on the quantum of ITC that could be availed in case of any mismatch with the GSTR – 2A vis-à-vis the financial records. This restriction as been effected by way of an amendment to the existing law.

  4. Objective of the amendment • This amendment is in line with the new Return format which is now proposed to be effective 1 April 2020. • The amendment also seeks to address the large number of instances of fake invoices on the basis of which fraudulent ITC was availed by taxpayers in order to deceive and cause loss to the Government Treasury.

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