GST Latest News – Understanding the Important ITC Notifications – Nov, 2023

As per the GST Latest News, during the month of November, 2023, emphasis has been laid on the ITC provisions that will be impacting the suppliers and recipients irrespective of the size, nature and constitution of their registered business. Thus, it is pertinent for all such taxpayers to keep a tab on the GST Latest News to avoid any lapses on account of misinformation or lack of information.

1. GST Latest News regarding – ITC Reversal on account of Rule 37A dated 14.11.2023

(i) Brief understanding of Rule 37A

Rule 37A states that where ITC has been availed by the recipient however, the tax has not been paid by the supplier on or before 30th September following the end of such financial year, the ITC will be reversed in the hands of the recipient on or before 30th November of the following financial year.

If the recipient fails to reverse the ITC in his GSTR-3B before 30th November of the next financial year, then such amount shall become payable by the recipient along with interest u/s 50. When the said supplier subsequently furnishes the return in FORM GSTR-3B for the said tax period, the said registered person may re-avail the amount of such credit in the return in FORM GSTR-3B for a tax period thereafter.

(ii) Change via Notification regarding ITC Reversal on account of Rule 37A dated 14.11.2023

To facilitate the taxpayers, such amount of ITC required to be reversed on account of Rule 37A of CGST Rules for the financial year 2022-23 has been computed from system and has been communicated to the concerned recipient. The email communication to this effect has been sent on the registered email id of the taxpayer.

The taxpayers are advised to take note of it and to ensure that such ITC, if availed by them, is reversed as per rule 37A of CGST Rules before 30th of November, 2023 in Table 4(B)(2) of GSTR-3B while filing the concerned GSTR-3B.

(iii) Conclusion

Thus, there is no amendment in Rule 37A. Therefore, this GST latest news does not pertain to any insertion or deletion in the law. Merely the system generated data will be made available to the taxpayers on the basis of which the ITC will have to be reversed by them.

2. GST Latest News – Advisory for online compliance pertaining to ITC mismatch – GST DRC – 01C

(i) ITC mismatch in ITC available in GSTR – 2B and the ITC being claimed in GSTR – 3B

It has been observed that the ITC being claimed in the GSTR – 3B by the taxpayers is sometimes in excess of the ITC available for claim in GSTR – 2B. This is causing incorrect amount being declared as tax payable.

(ii) Latest functionality by the GSTN – Form DRC – 01C

To resolve this issue, as per the GST latest news, GSTN has developed a functionality to generate automated intimation in Form GST DRC-01C which enables the taxpayer to explain the difference in Input tax credit available in GSTR-2B statement & ITC claimed in GSTR-3B return online as directed by the GST Council. This feature is now live on the GST portal.

(iii) How does this functionality work?

This functionality compares the ITC declared in Form GSTR – 3B and the ITC available in Form GSTR – 2B. If the claimed ITC in GSTR 3B exceeds the available ITC in GSTR-2B by a predefined limit or the percentage difference exceeds the configurable threshold, taxpayer will receive an intimation in the form of DRC-01C.

Upon receiving the intimation, the taxpayer must file a response using Form DRC-01C Part B. The taxpayer has the option to either provide details of the payment made to settle the difference using Form DRC-03, or provide an explanation for the difference, or even choose a combination of both options.

(iv) Consequences of non-compliance

In case, no response is filed by the impacted taxpayers in Form DRC-01C Part B, such taxpayers will not be able to file their subsequent period GSTR-1/IFF.