Taxpayers have witnessed multiple changes in provisional ITC under the GST regime; from the 20% ITC rule being reduced to 10% and 5%. Now, the latest change in this regard states that taxpayers can claim ITC only if the same invoice/debit note is reflected in GSTR 2A/2B. If you have an invoice in your purchase register and the same is not uploaded by your vendor in their GSTR 1, you cannot claim Input Tax Credit from 1st January 2022.
Know more about Provisional ITC here.
GST Notification 39/2021 Updates
This change has been brought into practice via the recently released Notification 39/2021 dated 21-12-2021.
As per section 16 (2) (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. This means that ITC of a particular invoice/debit note is available only when the same is furnished by the supplier in his statement of outward supply i.e. FORM GSTR-1 and it has been communicated to the recipient in the prescribed manner i.e. in FORM GSTR-2A/ GSTR 2B.
How does changes in provisional ITC under the GST impact you?
ITC Claim: Unlike before, ITC Claim has now become tightly coupled with the GSTR 1 filing of your suppliers.
Vendor Health Check: It’s imperative to ensure that all your vendors are filing the return on time. You may also need to follow up with them or nudge them from time to time regarding their filing status. It can be hard to keep a track of all your vendors, we understand. Thus, you can take the help of IRIS Peridot! It shows the filing history of all your vendors and helps you nudge them if needed.
Monitoring Tool: Keep track of ITC in your GSTR 3B filings at a granular level and safeguard yourself from claiming ITC from non-compliant vendors.
Here is a quick checklist covering the pre-requisites for availing credit by a registered person:
- Recipient is in possession of tax invoice or any other specified taxpaying document
- Recipient has received the goods or services
- Tax is actually paid by the supplier. (i.e. through GSTR 3B tax paid by supplier) subject to provision of section 41
- Recipient has furnished GSTR 3B
- And now once the Supplier furnished details in GSTR 1 and same is reflected in GSTR 2A/2B to the recipient then ITC can be claimed.
How can IRIS Sapphire help you deal with changes in provisional ITC?
With Sapphire, you can get the list of invoices booked in your Purchase Register but not yet filed by your vendors.
We can help you remind your vendors well before the due date to file returns on time.
With Sapphire, you can be compliant and have an audit trail while claiming ITC by marking your decision at the invoice level and also in which month you claimed.
It also helps you to define access rights for your team and enable them to work independently yet collaboratively on invoices for ITC computation.
IRIS Sapphire is an all in one powerful GST Solution for a seamless GST Return filing that supports multiple GST Return filing, PAN level data view, bulk operations, advanced 2A-Purchase Register reconciliation tool, vendor management and 100 % ITC Claims.
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