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

[CA Bimal Jain]

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:

• “GST Credit is not dependent upon GSTR 2A or 2B and Importance of GSTR 1 & GSTR 3B || CA Bimal Jain” by CA Bimal Jain- https://www.youtube.com/watch?v=9w4p7VpO1As
• "GST Credit is now dependent upon GSTR 2A/ 2B w.e.f January 1, 2022" || CA Bimal Jain - https://youtu.be/XL1dbbAMBBY

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 [email protected])

Discussions to this article

[Vinay Kunte]

Sir

Based on the amendment to Section 16 and Rules 36(4), can we now claim the ITC of IGST paid on import of goods just like the ITC of GST paid under RCM? The there is no supplier who as a taxpayer will file the return and the tax is already paid to the government. Also the goods are received under defined duty paying documents under section 31 I.e. Bill of entry.

It has been a case that the data of BOE's does get extra Ted to 2B even though the same has been correctly transmitted by ICEGATE to GST portal under the correct GSTIN. The search BOE transaction is also not very helpful as it is difficult to get the correct reference day and moreover there was not a single BOE extra Ted to GSTR 2B in Nov-2021 which has caused a lot of burden on tax payers.

Please provide your valuable guidance in the matter.