CLARIFICATION ON CIRCULAR NO. 193/05/2023-GST (17TH JULY 2023)

Clarification on Circular No. 193/05/2023-GST (17th July 2023). Understand the treatment of differences in Input Tax Credit (ITC) availed in GSTR-3B compared to GSTR-2A for the period 01.04.2019 to 31.12.2021. Learn about the applicable rules, percentages, and examples to navigate these GST updates effectively.”

Clarification regarding Circular No. 193/05/2023-GST, Dated 17th July, 2023 

In case, where difference between the ITC claimed in FORM GSTR-3B and that available in FORM GSTR 2A exceeds Rs 5 lakh , the proper officer shall ask the registered person to produce a certificate for the concerned supplier from the Chartered Accountant (CA) or the Cost Accountant (CMA) with UDIN , certifying that supplies in respect of the said invoices of supplier have actually been made by the supplier to the said registered person and the tax on such supplies has been paid by the said supplier in his return in FORM GSTR 3B. 

In cases, where difference between the ITC claimed in FORM GSTR-3B and that available in FORM GSTR 2A of the registered person in respect of a supplier for the said financial year is upto Rs 5 lakh, the proper officer shall ask the claimant to produce a certificate from the concerned supplier to the effect that said supplies have actually been made by him to the said registered person and the tax on said supplies has been paid by the said supplier in his return in FORM GSTR 3B.Now let me make it clear that ITC can be claimed subject to bonafide errors committed by supplier while reporting invoices in GSTR-1 and fulfilment of conditions stated in Section 16(2) OF CGST Act 2017

Now proceeding further I will discuss today about dealing with differences in ITC availed in GSTR-3B as compared to GSTR-2A for the period 01.04.2019 to 31.12.2021 in simplified way-

We all know about Rule 36(4) of CGST rules that allows additional credit to be claimed in GSTR-3B as compared to GSTR-2A upto specified limit w.e.f 09.10.2019 as follows- 

Clarification regarding treatment of difference in GSTR-3B VS GSTR-2A-

1. Tax Period 01.4.2019 to 08.10.2019

Since rule 36(4) came into effect from 09.10.2019 only, the guidelines provided by Circular No. 183/15/2022-GST dated 27th December, 2022 shall be applicable, in toto, for the period from 1.04.2019 to 08.10.2019.

2. Tax Period 09.10.2019 to 31.12.2019

Rule 36(4) of CGST Rules permitted availment of ITC details of which have not been furnished by suppliers in GSTR-1/IFF to the extent not exceeding 20 percent of the eligible credit available in respect of invoices or debit notes the details of which have been furnished by the suppliers under sub-section (1) of section 37 in FORM GSTR-1 /IFF.

Take an example-

Total amount of ITC available in GSTR-2A - Rs 300000 Total amount of ITC availed in GSTR-3B- Rs 500000

As per Rule 36(4) the registered person cannot avail ITC in excess of an amount of Rs 300000*1.2 = Rs 360000

3. Tax Period 01.01.2020 to 31.12.2020

Rule 36(4) of CGST Rules permitted availment of ITC details of which have not been furnished by suppliers in GSTR-1/IFF to the extent not exceeding 10 percent of the eligible credit available in respect of invoices or debit notes the details of which have been furnished by the suppliers under sub-section (1) of section 37 in FORM GSTR-1 /IFF.

Take an example-

Total amount of ITC available in GSTR-2A - Rs 300000 Total amount of ITC availed in GSTR-3B- Rs 500000

As per Rule 36(4) the registered person cannot avail ITC in excess of an amount of Rs 300000*1.1 = Rs 330000 

4. Tax Period 01.01.2021 to 31.12.2021

Rule 36(4) of CGST Rules permitted availment of ITC details of which have not been furnished by suppliers in GSTR-1/IFF to the extent not exceeding 5 percent of the eligible credit available in respect of invoices or debit notes the details of which have been furnished by the suppliers under sub-section (1) of section 37 in FORM GSTR-1 /IFF.

Take an example-

Total amount of ITC available in GSTR-2A - Rs 300000 Total amount of ITC availed in GSTR-3B- Rs 500000

As per Rule 36(4) the registered person cannot avail ITC in excess of an amount of Rs 300000*1.05 = Rs 315000

5. Important Note-

i. Notification No. 30/2020-CT dated 03.04.2020

The condition of rule 36(4) shall be applicable cumulatively for the period February to August, 2020 and adjusted in return for month of September 2020

ii. Notification No. 27/2021-CT dated 01.06.2021

The condition of rule 36(4) shall be applicable cumulatively for the period April to June 2021 and adjusted in return for month of June 2021.

6. Further, above clarifications/instructions will apply only to the ongoing proceedings in scrutiny/ audit/ investigation, etc. for the period 01.04.2019 to 31.12.2021 and not to the completed proceedings.