GST Authorities Issue Notices to Companies for Input Tax Credit Discrepancies.

 Several companies have received notices from Goods and Services Tax (GST) authorities regarding discrepancies in their claimed input tax credit (ITC), according to sources familiar with the situation. This follows a thorough examination of the input tax credited by these companies, which revealed disparities with their annual returns.

The notices have been issued under Section 150 of the CGST Act, 2017, requiring taxpayers to submit an information return detailing the reasons for the “short reporting” of input tax credit.

“Short reporting” occurs when the input tax credit declared in the annual return form (GSTR-9) is lower than that claimed in the monthly forms (GSTR-3B or GSTR 2B). GSTR-3B serves as a monthly self-declared summary of GST returns, while GSTR 2B is an auto-generated form providing details of eligible and ineligible ITC for each month.

Most of these notices were issued in January for the April to November period of 2023-24.

Businesses and experts argue that while the law permits officials to request an information return, many notices are issued in a mechanical manner, without verifying whether the taxpayers have actually utilized the ITC, thus adding to compliance burdens.

“Several notices have instructed taxpayers to reverse even unclaimed ITC in GSTR-3B mechanically, without any critical analysis,” commented one expert, questioning the rationale behind reversing unclaimed ITC.

In a post-budget interview with ET, Sanjay Kumar Agarwal, Chairman of the Central Board of Indirect Taxes and Customs, emphasized that the department cannot overlook an ITC mismatch detected within the system.

Source from: https://www.a2ztaxcorp.com/gst-authorities-issue-notices-to-companies-for-input-tax-credit-discrepancies/