The Goods and Services Tax Network ( GSTN ) Under Rule 37A of the Central Goods and Services Tax Rules, has introduced a process for the reversal of Goods and Services Tax ( GST ) Input Tax Credit ( ITC ) when the supplier is unable to file the GSTR-3B return within the GST Portal.
The information and implications of Rule 37A and the updates in GSTR-2B are stated as
GST ITC Reversal for Non-compliance Suppliers Under Rule 37A
Reversal Requirement: If a supplier is unable to file their GSTR-3B return for a specific tax duration by the 30th of September following the finish of the pertinent fiscal year, the receiver should reverse the related ITC. The same ensures that GST ITC claims are merely available if the suppliers complete their GST return liability.
GST Compliance Timeline
For the financial year mentioned below, the suppliers should file their GSTR-3B return by 30th September.
If the supplier does not adhere then the receiver needs to reverse the ITC by 30th November ( or 20th November, the due date for October’s GSTR-3B ).
- Update in GSTR-2B: Under Rule 37A Auto-Population of ITC Reversals
- GST ITC Reclaiming: The recipient is enabled to reclaim the reversed ITC in future tax durations, once the supplier files their GSTR-3B. In the pertinent sections of GSTR-3B ( Table 4B and Table 4D ), the same reclamation is notified.
The new update on the GST portal permits GSTR-2B to auto-populate ITC reversals under Rule 37A. The same eases the compliance procedure of the taxpayers, allowing them to recognize and reverse the linked ITC to the suppliers who have not filed their GSTR-3B.
Steps for Assuring GST Compliance Under Rule 37A
- GSTR-3B Reversal: If any supplier is unable to file their GSTR-3B within the filing time of the recipient filing their October GSTR-3B then the assessee should reverse the ITC temporarily in Table 4B(2) of their return.
- Reclaim GST ITC: The taxpayer can reclaim the reversed ITC by reporting it in Table 4B(5) and reflecting it in Table 4D(1) in prospective GSTR-3B filings once the suppliers file their due returns.
- Determine Non-Compliant Suppliers: The assessees must analyze their GSTR-2B statement for September 2024 to determine the suppliers who are not able to file their GSTR-3B for the pertinent duration.
- Follow-Up with Suppliers: To prevent ITC reversals, it is suggested that the non-compliant suppliers be contacted and asked to file their GSTR-3B before the taxpayer furnishes their October 2024 return.
The same updated feature has the motive to facilitate the taxpayers’ filing procedure by decreasing manual input and improving precision in ITC reporting. The assessees are motivated to check their GSTR-2B and validate the information shown in the GSTR-9 return using the updated facility for more straightforward filing.
Previously the taxpayers were needed to reconcile the ITC claimed in FORM GSTR-3B with the details shown in FORM GSTR-2A as per sub-rule (4) was inserted into Rule 36 of the Central Goods and Services Rules, 2017 ( “the CGST Rules” ) which comes into force from October 09, 2019.
