Role of GSTR-2A and GSTR-2B for taking Input Tax Credit while filing GSTR-3B

[Shilpi Jain]

One of the major concerns of the Government in relation to indirect tax revenue leakage has always been the credit taken or refund sanctioned by/to the taxpayers without the said revenue reaching the Government. This happens when the supplier does not deposit the tax with the Government for any reason. To tackle such a situation, the Government thought it fit to introduce the matching concept under GST right from the time the model law was drafted.

However due to technological and implementation challenges this could not be implemented full-fledged. In the 28^th GST Council meeting also it was mentioned that there would not be any automatic reversal of credit for recipient in case of mismatch between GSTR-2A and GSTR-3B credit and proper recovery mechanism should be followed with the supplier. Subsequently, the Government thought it fit to introduce this concept in a phased manner which began with the introduction of rule 36(4) of the CGST Rules, 2017 wherein for the first time there was a requirement of taking credit by the recipient, being not more than 120% of the eligible credit which is uploaded by the supplier in his Form GSTR1. Later this limit was decreased to 110% and 105%.

Now, as per the Finance Bill 2021, it looks like the Government is bent upon making the recipient eligible to credit only to the extent it has been declared by the supplier in his Form GSTR-1. Added to all of this is the fact of existence of 2 forms i.e. GSTR-2A and GSTR-2B which auto populates the suppliers’ invoices. Many of the taxpayers are in a dilemma as to which of these forms must be looked at, to ascertain the eligibility of credit.

A snapshot of the various return forms is given below:

1. Form GSTR-1 is a form in which the supplier declares invoice-wise details of his supplies made. The due date of this form is 11^th of the succeeding month. For example for Apr ’21 the due date is 11^th May ’21.
2. IFF Facility – This is available for persons who have opted for the QRMP scheme (Quarterly return filing with Monthly Payment). This is available only for the first 2 months of the quarter. Details of outward supply B2B invoices can be uploaded by 13^th of the succeeding month. For example for Apr ’21 due date is 13^th May ’21.
3. Form GSTR-3B is a form through which GST taxes are paid. There is no compulsion presently at the GST portal which requires the taxpayer to pay the taxes which have been declared in Form GSTR-1 i.e. even if a tax liability of ₹ 1 crore is declared in Form GSTR-1, a taxpayer can still go ahead and pay ₹ 50 lakhs in his Form GSTR-3B since these forms are not synchronised completely. Though, presently it is highlighted in red in the portal when the difference between the GSTR1 and GSTR3B figures is more than 5%.
4. Form GSTR-2A is one which gives month-wise details of supplies declared by the supplier in his Form GSTR-1 based on the date of the supplier’s invoice. Say, if a supplier declares the invoice dated Apr ’20 in his Form GSTR-1 of Feb ’21 filed by 20^th Mar ‘21, the said invoice detail will be reflected in the Form GSTR-2A of Apr ’20 only, since the invoice is dated Apr ‘20. Hence it is a dynamic form which keeps changing every time a supplier declares his past supplies in any of his Form GSTR-1 by whatever date. The following table summarises a few scenarios in this regard:

S No.	Supplier’s invoice date	Disclosed in Form GSTR1 of:	GSTR1 filed by	Appears in recipient Form GSTR2A of:
1.	Apr ‘20	Apr ‘20	11th May ‘20	Apr ‘20
2.	Apr ‘20	Aug ‘20	11th Sep ‘20	Apr ‘20
3.	Apr ‘20	Aug ‘20	11th Feb ‘21	Apr ‘20
4.	Apr ‘20	Apr ‘21	11th Jun ‘21	Apr '20

From the above it can be seen that irrespective of the month in which the Form GSTR-1 is filed and the period of Form GSTR-1 in which the supply is disclosed, the invoice appears in Form GSTR-2A of the recipient based on the date of invoice of the supply.

Further, imports, supplies liable under RCM (from unregistered persons) are not auto-populated in Form GSTR-2A.

Also, if any supply appears in Form GSTR-2A, it does not mean that taxes have been paid by the supplier for such supply.

5. Form GSTR-2B is a form which was available on GST portal only from Aug ’20. This also gives details of supplies declared by the supplier in his Form GSTR-1, however it is a static form and its details do not change every month. For a particular month this form takes details of invoices which are declared upto 11^th(due date of GSTR1) / 13^th (due date of IFF) of the succeeding month. For example,

• Form GSTR2B for Apr ’21 (1^st month of the quarter) will have details of invoices declared by the supplier in his form GSTR1 submitted from 12^th Apr ’21 to  13^th of May ’21,
• Form GSTR2B for May ’21 (2^nd month of the quarter) will have details of invoices declared by the supplier in his form GSTR1 submitted  from 14^th May ’21 to 13^th of Jun ’21,  
• Form GSTR2B for Jun ’21 (3^rd  month of the quarter) will have details of invoices declared by the supplier in his form GSTR1 submitted  from 14^th Jun ’21 to  11^th of Jul ’21

 Thus, the auto population in this form is on the basis of the date of filing of the Form GSTR-1 in which the particular invoice is declared.

S No.	Supplier’s invoice date	Disclosed in Form GSTR1 of:	GSTR1 filed by	Appears in recipient Form GSTR2B of:
1.	Apr ‘20	Apr ‘20	11th May ‘20	Apr ‘20
2.	Apr ‘20	Aug ‘20	11th Sep ‘20	Aug ‘20
3.	Apr ‘20	Aug ‘20	11th Feb ‘21	Jan ‘21
4.	Apr ‘20	Apr ‘21	11th Jun ‘21	May '21

Hence, it can be noted that neither the date of supplier invoice nor the month of the Form GSTR-1 is relevant. It is only the date of filing of the Form GSTR-1 which is relevant to determine which Form GSTR-2B the invoice will be disclosed. In our example in para d above, the invoice of Apr ’20 which is declared in the Form GSTR-1 filed on 11^th Feb ’21 will appear in the Form GSTR-2B of Jan ’21.

Form GSTR-2B also declares the details of the imports from outside India and SEZ.

 

Comparison of Form GSTR-2A and Form GSTR-2B

S. No.	GSTR 2A	GSTR 2B
1	It is a dynamic form. The details keep changing each time the suppliers file their GSTR-1 with invoices of the past period.	It is a static form and does not change.
2	Discloses entries even if GSTR1 is not submitted by the supplier. Mere uploading in the Form GSTR-1 by the supplier will be visible in the Form GSTR-2A.	Discloses entries only to the extent the Form GSTR1 is submitted by the supplier
3	This form is available at all times	Available only after the due dates of GSTR-1 or IFF. Cannot be seen in the middle of the month to check the updated list of invoices submitted by the supplier after the due date of filing Form GSTR-1 or IFF.
4	This form is available for the period from Jul ’17	This form is available for the period from Aug ‘20 onwards only
5	In this form it can be tracked whether Form GSTR3B for a particular month is filed or not	This kind of track is not available in Form GSTR-2B
6	Does not track any ineligible credit	Tracks ineligible credit on the basis of Place of supply (PoS) i.e. if PoS is in a State other than the recipient’s State of registration; and The date of disclosure by the supplier in Form GSTR-1 i.e. if the supplier discloses the invoice of FY 2019-20 after 20th Oct ’20, it will be shown as ineligible.
7	Auto-population of eligible credit in Form GSTR-3B is not based on this statement.	Auto-population of eligible credit in Form GSTR-3B is based on this statement.

With a brief of the above forms, the following points would be relevant to consider which form is to be seen to comply with rule 36(4):

1. Rule 36(4) which requires the recipient to avail credit based on the declaration of supplies by the supplier does not specify the form i.e. GSTR2A  or GSTR2B, that needs to be followed in order to determine this.
2. This rule also does not stipulate that the credit can be availed only if the supplies are disclosed by the supplier before the due date of filing Form GSTR1 or IFF facility for a particular month. In such a scenario, if the recipient has received the goods/service and is in receipt of a valid invoice dated in a particular month, credit should be eligible in the Form GSTR3B of such month if the invoice is disclosed by the supplier in his form GSTR-1 or IFF, even if it is just before the recipient files his Form GSTR3B. For example, from 12^th May ‘21 to 19^th May ’21 if any supplies are disclosed by the supplier in his Form GSTR-1 relating to Apr ‘21, it will not be visible in Form GSTR-2B of Apr ’21 to the recipient who is filing his Form GSTR-3B on 20^th May ’21. The recipient need not restrict his credit only to the extent of the entries in the supplier GSTR-1 up to the due date of filing of Form GSTR-1. Thereby, following Form GSTR-2B could lead to a delay in availing credit.
3. Form GSTR-2B is not available for the period before Aug ’20. Hence, following this for the FY 20-21 may not be feasible in all cases.
4. In the instructions given after Form GSTR-2B it has been mentioned that the taxpayer should avail credit as per the details appearing in Form GSTR-2B though it should be ensured that credit is not availed twice in respect of any supplies. Form GSTR-2B of say Mar ’21 can include the entries of a purchase invoice dated Jun ’19 also if the supplier files this invoice is the Form GSTR-1 that is filed now. Applying the 20% or 10% or 5% buffer right away on the figures appearing in Form GSTR-2B could lead to excess availing of credit.
5. No third party software is available which automate reconciliation of credits with Form GSTR-2B entries.

So it looks like it woud be better to follow Form GSTR-2A for reconciling the credits availed with the entries disclosed by the suppliers.

Dilemma for the taxpayers

However, it seems like the department is following Form GSTR-2B to track the amount of credit uploaded by the supplier, to compare with the credit actually availed by the recipient in his Form GSTR-3B. In such case, if a taxpayer wants to be very conservative and follow what the department is looking for, then this dilemma of which form to use can be sorted out considering the different categories of taxpayers. Following are the categories of taxpayers and we have looked at the possibility of these taxpayers moving to reconcile using Form GSTR-2B.

1. Taxpayers who have availed credit as per Form GSTR-2A – These taxpayers have not availed credit in excess of that appearing in Form GSTR-2A i.e. they have availed credit only if the invoice has been disclosed by their supplier in Form GSTR-1.

These taxpayers can avail credit as per the entries appearing in Form GSTR-2B every month now (though credit of ineligible invoices like food, beverages, etc, relating to blocked credit and others, should not be availed). However, such taxpayers should always have a list of invoices in respect of which credit is eligible but are not appearing in Form GSTR-2A. Further, since GSTR-2B gives entries only up to the due date of filing Form GSTR-1 or IFF, the taxpayer would loose to avail credit on the invoices which are disclosed after the said due date and the date of filing of Form GSTR-3B by the recipient if he follows GSTR-2B to ascertain the eligible credit.

2. Taxpayers who have availed credit as per GSTR-2A + allowed % i.e. 20% or 10% or 5%: These are taxpayers who have taken credit only if the invoice has been disclosed by their supplier in Form GSTR-1, however, they have also availed benefit of the allowed % in rule 36(4) i.e. if ₹ 100 is appearing in Form GSTR-2A of Sep ’20 and if they were eligible for ₹ 115 in such month, they had availed ₹ 110 in their GSTR-3B.

It is suggested that these taxpayers continue to avail credit as per GSTR2A for FY 2020-21 as done until now for the reason that the Form GSTR2B is not available for the period prior Aug’20 and the usage of Form GSTR2B would pose challenges for these taxpayers in case say the invoices of Apr ’20 appear in the Form GSTR2B of Jan ’21 (as the supplier has disclosed this invoice in the GSTR1 filed by 11^th Feb ’21), since the marginal 10% credit has already been taken for Apr ’20. In such cases unless there is meticulous tracking, it could lead to excess availing of credit.

For the FY 2021-22, they could move to Form GSTR2B if they wish to whereby, while looking at eligible credit for FY 2021-22 in Form GSTR 2B, the entries relating to earlier FY can be removed. Though there is no harm in continuing with reconciliation with GSTR 2A for this year as well. However, taking the buffer 5% credit would create a lot of hassle if the taxpayer follows Form GSTR 2B.

3. Taxpayers who have availed credit as per books without looking into GSTR2A– For these taxpayers it is suggested that they perform the reconciliation of GSTR2A and GSTR3B and in case they wish to avail credit
   • Exactly as appearing Form GSTR2A without any mark up of 20% / 10% / 5%, then they can start reconciling their books credit with GSTR2B going forward,
   • As appearing in Form GSTR2A with the permissible mark up of 20% / 10% / 5%, then they can reconcile their books credit with GSTR2A going forward.

There are a lot of other legal and practical issues with regard to the availing of credit as per rule 36(4) or the usage of the forms GSTR 2A or GSTR 2B, which seems would have to be settled by the Courts in the due course of time. Though until then the taxpayers would get into the culture of insisting the suppliers to start disclosing their invoices in Form GSTR-1 and the department, in cases where it is possible, would continue to take double benefit by asking the recipient to reverse the credit and also follow the supplier to recover the taxes due.

For any queries/feedback write to [email protected].

 

CA Shilpi Jain

Mar ‘21

Discussions to this article

[KASTURI SETHI]

Madam,

Your article is very very useful. It is timely. Your article will help in avoiding avoidable mistakes.

Thanks & regards

[Ganeshan Kalyani]

Detailed article. Useful. Thanks.

[SRINIVASAN BALAN]

Very useful article, cleared many doubts about GSTR-2A and 2B.

Thanks

CA S Balan

[Abhishek Aggarwal]

One of the best article I came across on the topic. Cleared all my doubts. Keep up the good work.