GST taxpayer alert! You need to be careful in filing November GST return after change of rule last month

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November 12, 2019 4:05 PM

GST alert! GST returns to be filed this month are the first returns after the change of rule in October. Experts advise taxpayers to be careful while calculating the ITC amount.

GST, Customs, Excise, CBDT, CBIC, CBECCBIC changed the rule for claiming ITC under GST last month.

GST latest circular: A new circular by the Central Board of Indirect Taxes and Customs (CBIC) has put the onus on the GST taxpayers to correctly calculate the amount of input tax credit to be availed by them in a month. Any mistake in the calculation may lead to the imposition of interest and penalty. Under a new rule notified last month, the apex body to administer the indirect taxes in the country had restricted the amount of input tax credit to be availed by a buyer to 20% over the eligible amount. It means that a buyer can avail the input tax credit only for the amount where invoice matching with the details uploaded by his suppliers in their GSTR1 forms has already been done plus 20% of the matched amount. However, in the latest circular issued on Monday, the CBIC clarified that it will be the responsibility of taxpayers to avail the credit on the self-assessment basis as it will not be done through the GSTN portal. It means that GST registered buyers will be liable to pay interest and penalty if they make any mistake in calculating the amount of ITC claimed by them.

“The restrictions under 36 (4) are not implemented through the portal,” said the CBIC in a circular issued on Monday.

“It is the responsibility of the GST payer to follow and restrict the credit to 20% in case of non-filers,” said Pritam Mahure, a Pune based chartered accountant who has written extensively on GST.

Rule 36 (4) of the CGST Rules, that was notified last month, governs the input tax credit claims in terms of those invoices and vouchers that are to be uploaded on GSTN Portal under subsection 1 of section 37 of the Central Goods and Services Act of 2017.

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Under the provisions of section 37, a GST registered supplier is required to provide details of the taxes paid by him in the GSTR1 form for outward supplies (sale) to be filed by him on the GSTN portal. The details of taxes paid by him will be auto-populated in the GSTR-2 form that will be accessible to his buyers. Thereafter, those buyers, who wish to avail the input tax credit on the taxes already paid earlier by their suppliers, will need to match the details of ITC claimed by them in their GSTR-3 forms on the basis of auto-populated data available on GSTR-2 returns.

Though the data on GSTR2 form will be auto-populated once GST registered suppliers file their GSTR1 forms, however, the same information cannot be automatically used by the GST registered buyers to avail the input tax credit under the new rule 36 (4) that caps the ITC claims to the eligible amount plus 20% over and above the eligible amount. And the exact amount of the ITC to be claimed for the month will have to be calculated by the taxpayers on a self-assessment basis.

The CBIC also clarified that the restrictions under 36 (4) will be applicable only on those invoices/debit notes on which ITC is availed after October 9 this year.

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As reported earlier by Financial Express Online, the CBIC decided to issue a new notification yesterday to clarify the confusion over its notification issued on October 9 that capped ITC to 20% of the eligible amount.

Tax experts advise GST payers to be careful in claiming the ITC as this will be their first GSTR3 return after the new rule was notified last month.

“GST is a self-assessed law, thus the onus to follow the new rule is on the GST payer. Given this, non-compliance with the new rule may result in additional liability of interest and penalty,” Pritam Mahure told Financial Express Online.

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