Over the past year, the GST departments of almost all states have issued notices regarding discrepancies in Input Tax Credit (ITC) using the GST ASMT-10 form. These notices seek an explanation from taxpayers regarding the difference between the ITC claimed in GSTR-3B and the ITC available in
GSTR-2A/2B. This has raised an important concern among taxpayers and professionals regarding whether input tax credit can be denied based solely on a mismatch between the ITC claimed in GSTR-3B and that reflected in GSTR-2A/2B.
If there is a discrepancy between the ITC claimed by a business and the output tax liability declared by the supplier, the indirect tax authorities have the authority to notify the business. In such cases, if the business fails to provide a satisfactory response, they may be liable to pay an amount equal to the
excess credit claimed, along with interest and penalties. In order to deter fraudulent practices, an official committee has advocated for further restrictions on the returns filing system before the upcoming Goods
and Services Tax (GST) Council meeting. The aim is to limit the scope of claiming input tax credit. This indicates that there is a growing concern about fraudulent practices in relation to ITC claims.
According to news reports, taxpayers may receive a GST notice from the Department if the difference between the ITC claimed in GSTR-3B and GSTR-2B exceeds 20% or goes beyond Rs. 25 lakh. This threshold has been proposed as a trigger point for initiating further scrutiny and investigation into
potential discrepancies. It is important for taxpayers to carefully review and reconcile their ITC claims
with the available information in GSTR-2A/2B to ensure accuracy. Any discrepancies should be addressed and explained satisfactorily to the GST department if a notice is received. Failure to respond adequately may result in financial consequences in the form of additional payments, interest, and
penalties.
The upcoming GST Council meeting, scheduled to take place in the following week, will likely discuss these issues and the proposed restrictions on the returns filing system. The recommendations put forth by the official committee may be considered during the meeting. However, as of now, the specific
agenda for the meeting has not been made public.
It is advisable for taxpayers and professionals to stay updated with official announcements and guidelines from the GST department and the GST Council to ensure compliance with the regulations and to understand any changes or updates related to the input tax credit claiming process.
In conclusion, the issuance of notices regarding discrepancies in ITC in the past year has raised concerns among taxpayers and professionals. The possibility of denying input tax credit based on mismatches between ITC claimed in GSTR-3B and that reflected in GSTR-2A/2B is a significant issue.
The proposed restrictions on the returns filing system and the potential consequences for non-compliance indicate a tightening of regulations to address fraudulent practices. It is essential for taxpayers to be diligent in reconciling their ITC claims and to respond satisfactorily to any notices
received from the GST department.
