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GSTR-9 ITC Amendments (2022-23): Impact & Analysis

Publish Date: November 16, 2023

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Analysis and Impact of Amendments pertaining to Input Tax Credit (ITC) in Annual Return (GSTR-9) of F.Y.2022-23


In the intricate landscape of Indian taxation, the Goods and Services Tax (GST) has been a paradigm shift, reshaping how businesses function across the nation. ITC is the lifeline of GST, enabling smooth credit flow for a fair and efficient taxation process.

The legislature, aiming to facilitate the free flow of credit, introduced various amendments over the years, notably in Input Tax Credit. These changes have added layers of complexity to an already intricate system.

Key changes: Added condition for ITC, aligning with GSTR-2B, and altered reporting method in GSTR-3B.

Relevant provisions/notifications pertaining to the above amendment are summarized here for your ready reference:

Section 16(2) (aa) of the CGST Act 2017:

Section 16(2) of the CGST Act, 2017, introduced an additional condition for claiming ITC from January 1, 2022. ITC claim requires supplier’s GSTR-1 details communicated, reflected in recipient’s GSTR-2B.

Notification No. 14/2022 and Circular No. 170/02/2022-GST introduced changes to FORM GSTR-3B, focusing on ITC in Table 4. Guidelines were provided for reporting ITC in the amended GSTR-3B through the circular.

While discussions abound on the reporting impact of these amendments in GSTR-3B, it is equally crucial to deliberate on their impact on GSTR-9 (Annual Return) and another ITC-related event for F.Y. 2022-23.

Impact on Table 6 of GSTR-9

Reporting of ITC of F.Y.2021-22 claimed in F.Y.2022-23 owing to Section 16(2)(aa):

As per the amendment outlined in section 16(2)(aa) of the CGST Act, 2017, ITC can be claimed in GSTR-3B only if the same is reflected in GSTR-2B of the recipient. If the ITC of Jan 2022 – Mar 2022 gets reflected in GSTR-2B of F.Y. 2022-23, the same can be claimed in F.Y. 2022-23 only.

Reporting ITC in Table 6B of GSTR-9 (FY 2022-23) automatically populates Table 8B for comparison with Table 8A (ITC as per GSTR-2A).

Since Table 8A captures only transactions of the said year, this results in a negative amount (excess ITC claim) in Table 8D of GSTR-9 (FY 2022-23).

Such negative figures often trigger automated red flags in the system, prompting tax authorities to conduct assessments, adjudications, or investigations. To address this, it is advisable to report the F.Y. 2021-22 ITC claimed in F.Y. 2022-23 in Table 6M of GSTR-9 (FY 2022-23). Consequently, Table 6B of GSTR-9 will only reflect the ITC of F.Y. 2022-23.

Table 6M data auto-populates Table 8B, preventing discrepancies in Table 8D, facilitating seamless comparison with Table 8A. However, it is important to note that a negative amount will appear in Table 6J of GSTR-9.

 Reporting of ITC owing to changed format of GSTR-3B:
As discussed above there has been a change in reporting of ITC in Table 4 of GSTR-3B w.e.f. August 2022 return. The newly changed format requires us to report the ITC as under: –

Table 4 of GSTR-3BReporting Methodology
(A) ITC Available (whether in full or
part)
(1) Import of goodsAuto-populated from GSTR-2B
(2) Import of servicesManual Entry
(3)  Inward supplies liable to reverse charge (other than 1 & 2 above)Auto-populated from GSTR-2B for registered persons + Manual entry for RCM on URD supplies.
(4)  Inward supplies from ISDAuto-populated from GSTR-2B
(5)  All other ITCAuto-populated from GSTR-2B
(B) ITC Reversed
(1) As per rule 38,42 and 43 of the CGST Rules and Section 17(5)

Report non-reclaimable/permanent ITC reversals here due to Rule 38 for banking companies, Rules 42 & 43 for proportional ITC reversal on exempt turnover, and Section 17(5) for ineligible/blocked ITC. However, it’s important to note that these reversals, disclosed as per government expectations, should not be claimed in any subsequent GSTR-3B.

2) Others

Because of Rule 38 for banking companies, Rules 42 and 43 for exempt turnover, and Section 17(5) for ineligible/blocked ITC, taxpayers must report non-reclaimable ITC/permanent reversals. However, it’s noteworthy that while these reversals are unclaimable in subsequent GSTR-3B, ITC reversal (excluding credit notes) can be reclaimed in the next GSTR-3B. This reclaimed amount should be added to Table 4(A)(5) and reported in 4(D)(1).

(C) Net ITC Available
 (A) – (B)
(D) Ineligible ITCReport all reclaimable ITC/temporary ITC reversals due to Rule 37, Sec.16(2)(b), and Sec.16(2)(c). However, note that ITC (excluding credit notes) reclaimed in subsequent GSTR-3B should be added in Table 4(A)(5) and reported in 4(D)(1) because of procedural requirements.
(1) ITC reclaimed which was reversed under Table 4(B)(2) in earlier tax periodsReporting of ITC re-claimed in Table 4(A)(5) which was reversed in Table 4(B)(2) of GSTR-3B in earlier periods.
(2) Ineligible ITC under section 16(4) and ITC restricted due to POS provisionsITC restricted by Section 16(4) for being reported by the supplier after 30th November of the following year. ITC is restricted due to the place of supply (POS) rules.

CONCLUSION:

In GSTR-9, taxpayers must bifurcate the Gross ITC availed in GSTR-3B, reporting B2B ITC claimed in Table 6B. This amount automatically populates Table 8B for comparison with Table 8A (auto-populated from GSTR-2A).


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