SHARE

| Dec-27-2021

GST ITC available when reflected in GSTR 2A/ 2B w.e.f. January 01, 2022

Background:

The Hon’ble Finance Minister, in Budget 2021-22, proposed changes vide the Finance Bill, 2021, that amends the Central Goods and Services Tax Act, 2017 (the CGST Act) to insert a new condition for availment of Input Tax Credit (“ITC”) under the GST.  Accordingly, amended Bill was passed in Rajya Sabha, the upper house, and it received presidential assent vide Finance Act, 2021.

Relevant provisions:

The CBIC vide Notification No. 39/2021–Central Tax dated December 21, 2021 notified the below mentioned amendments made vide Section 109 of the Finance Act, 2021 w.e.f. January 01, 2022:

Section 16(2) - Eligibility and conditions for taking input tax credit – Section 109 of the Finance Act, 2021

Current provisions

Notified provisions

 

 

 

 

-------

After clause (a), in sub-section (2) of Section 16, the following clause shall be inserted:

“(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.”

Our comments:

New condition to avail Input Tax Credit:

It was been proposed to insert the new clause ‘(aa)’, after clause (a), in Section 16(2) of the CGST Act, that provides an additional condition to claim ITC based on GSTR-2A and newly introduced GSTR-2B, i.e., ITC on invoice or debit note can be availed only when details of such invoice/debit note have been furnished by the supplier in his  outward supplies (GSTR-1) and such details have been communicated to the recipient of such invoice or debit note.

Hence, w.e.f. January 01,2022, following conditions need to be satisfied under Section 16(2) of the CGST Act for availing GST ITC on inward supplies of goods or services or both:

  • The recipient is in possession of tax invoice or debit note issued by a supplier;
  • The details of the above-mentioned invoice or debit note have been furnished by the supplier in the statement of outward supplies and such details have been communicated to the recipient in the manner specified under Section 37 of the CGST Act;
  • The recipient has received the goods or services or both;
  • The tax charged in respect of such supply has been actually paid to the Government and
  • The recipient has furnished the return under Section 39 of the CGST Act.

No relevance of 5% limit mentioned in Rule 36(4) of the Central Goods and Services Tax Rules, 2017 ("CGST Rules”)

This amendment was proposed to avoid the unnecessary litigation and writ petitions challenging the validity of Rule 36(4) of the CGST Rules that prescribes the similar condition with 5% limit to avail ITC on invoices/debit notes not uploaded by the supplier in GSTR-1 (as amended vide Notification No. 94/2020- Central Tax dated December 22, 2020 w.e.f. January 01, 2021) which will be of no relevance w.e.f. January 01, 2022 as the recipient would not be able to take any ITC if the same is not coming in recipients GSTR-2A and/or 2B.

To know more, kindly see our video:

The Notification can be accessed at: https://www.cbic.gov.in/resources//htdocs-cbec/gst/notfctn-39-central-tax-english-2021.pdf

(Author can be reached at info@a2ztaxcorp.com)

DISCLAIMER: The views expressed are strictly of the author and A2Z Taxcorp LLP. The contents of this article are solely for informational purpose and for the reader’s personal non-commercial use. It does not constitute professional advice or recommendation of firm. Neither the author nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon. Further, no portion of our article or newsletter should be used for any purpose(s) unless authorized in writing and we reserve a legal right for any infringement on usage of our article or newsletter without prior permission.

Similar reads

ITC ineligible on CSR activities being excluded from normal course of business

The AAR, Gujarat in the matter of M/S. Adama India Private Limited [Advance Ruling No. GUJ/GAAR/R/44/2021 dated August 11, 2021] held that, no Input Tax Credit (“ITC”) would be available for Corporate

Dec-27-2021

Read More

GST leviable on reimbursement of electricity and water charges and to be included in the value of supply

The AAR, Maharashtra in the matter of M/s. Indiana Engineering Works (Bombay) Pvt. Ltd. [Advance Ruling No. GST-ARA-120/2019-20/B-114 dated December 16, 2021] held that, GST payable on electricity

Dec-27-2021

Read More

Widened the scope of Section 83 of the CGST Act (Provisional Attachment of Property/ Bank Account) w.e.f. January 01, 2022

The Hon’ble Finance Minister, in Union Budget 2021-22, proposed changes vide the Finance Bill, 2021, that amends the Central Goods and Services Tax Act, 2017 (“the CGST Act”) with respect to provision

Dec-27-2021

Read More

Notified the amendments proposed in Section 74, 107, 151, 152 and 168 of the CGST Act, 2017 w.e.f. January 01, 2022

The Hon’ble Finance Minister, in Budget 2021-22, proposed changes vide the Finance Bill, 2021, that amends the Central Goods and Services Tax Act, 2017 (“the CGST Act”) with respect to amendments

Dec-27-2021

Read More

Notified clarification w.r.t recovery of self-assessed tax w.e.f. January 01, 2022

The Hon’ble Finance Minister, in Union Budget 2021-22, proposed changes vide the Finance Bill, 2021, that amends the Central Goods and Services Tax Act, 2017 (“the CGST Act”) with respect to recovery

Dec-27-2021

Read More