CGST guidelines now clarify ITC mismatches between GSTR-3B and 2A for FY 2017-19, specifying allowance conditions and certification rules.
A new CGST Circular, 183/15/2022, was issued on December 27, 2022. This circular clarifies the rules for claiming Input Tax Credit (ITC) reported in GSTR-3B but not reflected in GSTR-2A for the financial years 2017-18 and 2018-19. This updated guidance aims to provide clarity to taxpayers on proper ITC claims, ensuring compliance with tax regulations and minimizing potential disputes.
Applicability of the Circular
This CGST Circular specifically addresses recipients who claimed ITC for FY 2017-18 and FY 2018-19 in their GSTR-3B filings, even when these credits did not appear in GSTR-2A, under the following scenarios:
- The vendor submitted GSTR-3B but failed to file GSTR-1.
- The vendor filed both GSTR-1 and GSTR-3B, yet a specific invoice was omitted from GSTR-1.
- The vendor incorrectly categorized a B2B invoice as a B2C invoice in GSTR-1.
- The vendor reported an incorrect GSTIN in GSTR-1 (for instance, if a vendor supplying services to Tata mistakenly entered Reliance’s GSTIN instead of Tata’s).
Note: This circular does not override the deadline specified in the proviso of Section 16(4) of the CGST Act.
Prerequisites for Allowing ITC Claims
The Circular reiterates the essential conditions from Section 16(2) that must be met for ITC claims to be permissible:
- The buyer must have received the goods or services.
- The buyer must possess the corresponding invoice or debit notes.
- The buyer must have completed payment for the invoice.
- Verifiable evidence must exist confirming that the supplier has remitted the taxes and filed GSTR-3B, including the relevant invoice or debit notes.
| ITC difference between GSTR-2A and GSTR-3B | Certification required evidencing the differential ITC claim |
|---|---|
| More than Rs.5 lakh | CA/CMA certificate with a verifiable Unique Document Identification Number (UDIN)* |
| Less than or equal to Rs.5 lakh | Vendor certificate* |
Note: Points 1, 2, and 3 represent existing conditions under GST law. Condition 4 introduces a relaxation provided by the Circular, aligning with the recently incorporated provision in Section 16(2)(c) of the CGST Act.
*These certifications must confirm that the goods or services were genuinely supplied by the vendor to the buyer, and the corresponding tax has been paid by the vendor in their GSTR-3B.
Additionally, the Circular mandates that any ITC reversals must comply with Section 17 (Apportionment of credit and blocked credits) and Section 18 (Availability of credit in special circumstances). Furthermore, ITC must have been claimed within the stipulated timeframe under Section 16(4).
Why Prompt Action is Crucial
Many businesses are encountering discrepancies for the financial years 2017-18 and 2018-19. Therefore, businesses that receive notices for audit, scrutiny, or investigation must perform reconciliation and secure the necessary certifications to support their legitimate ITC claims. Even without receiving a formal notice, it is advisable to prepare and maintain comprehensive documentation to substantiate genuine ITC claims during potential departmental proceedings.
