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Input Tax Credit to be taken as per 2A vs 2B vs Books

What is ITC?

Input Tax Credit Mechanism is a backbone of GST . Registered person can avail the ITC on the inward supply irrespective of category of supplier for e.g. Manufacturer, Supplier, Agent, E-Commerce Operator etc. You are eligible to claim ITC on your Input, Input Service and Capital Goods. 

 

How to claim ITC?

For claiming of ITC you need to fulfill all the 4 conditions prescribed in Sectionn 16(2) of CGST Act

As per Section 16(2) of CGST Act 

Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless,––

(a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other taxpaying  documents as may be prescribed (Refer Rule 36);

(b) he has received the goods or services or both.

[Explanation.— For the purposes of this clause, it shall be deemed that the registered person has received the goods or, as the case may be, services––

  • where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise
  • Where the services are provided by the supplier to any person on the direction of and on account of such registered person

 

(c) subject to the provisions of section 41, the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilization of input tax credit admissible in respect of the said supply; and

(d) He (Recipient) has furnished the return under section 39 :

 

Provided that where the goods against an invoice are received in lots or installments, the registered person shall be entitled to take credit upon receipt of the last lot or installment:

 Provided further that where a recipient fails to pay to the supplier of goods or services or both, other than the supplies on which tax is payable on reverse charge basis, the amount towards the value of supply along with tax payable thereon within a period of 180 days from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be added to his output tax liability, along with interest thereon, in such manner as may be prescribed

Provided also that the recipient shall be entitled to avail of the credit of input tax on payment made by him of the amount towards the value of supply of goods or services or both along with tax payable thereon.

 

What is GSTR 2A?

GSTR 2A is a purchase-related dynamic tax statement that is automatically generated for each business by the GST Portal. When a supplier files his GSTR 1, the information is captured in GSTR 2A. It takes information of goods or services which have been purchased in a given month from the supplier's GSTR 1.

 

What is GSTR 2B?

GSTR 2B is a new Static Auto – Drafted Statement for Regular Taxpayer. It is Similar to GSTR 2A but fixed on a particular date and no changes for a period after that date.

 

New Provision inserted by Finance Act 2021 Section 16 (2)(aa)

The details of the invoice or debit note referred to in clause (a) has been furnished by the supplier in the statement of outward supplies and such details have been communicated to the  recipient of such invoice or debit note in the manner specified under section 37 i.e GSTR 1.

 

Author View

Section 16(2)(aa), has not been notified yet and the applicability of Rule 36(4) has been challenged before various Authorities & High Courts.

Sec 16(2)(aa) clearly gives power to Rule 36(4) and to GSTR 2B as well, but this section is not notified yet. In other word we can also say that once said Section will be notified then there is no requirement of Rule 36(4) as we can take the ITC to the extent it is auto populated.  

Meanwhile if you do not want to litigate then ensure that your supplier file his GSTR 1 or IFF by the due date i.e. 11th in case of monthly GSTR 1 or IFF by 13th in case of QRMP of the succeeding month so that your inward supply will reflected in GSTR 2B in the same period and you are eligible to avail the entire ITC. (Recommended for future run as well).