As per GST Notification 18/2022, the time limit to claim ITC and amend sales/CDN has been extended (including for FY 21-22) by the CBIC. So, the date has been changed for claiming ITC, issuing CDN, and doing amendments to returns of the previous year till 30th November by notifying clause 100 of the Finance Act 2022 to be effective from 01.10.2022.
Here is an important checklist for all the taxpayers to consider before filing their November GST Returns in order to claim ITC and amend sales/CDN timely:
1. Avail pending ITC
It is the last chance for availing the pending ITC for the financial year 2021-22 as the taxpayers file GSTR-3B. The entire reconciliation process for the year 2021-22, matching the invoices between GSTR-2A and your purchase book must be completed in order to save a lot of your hard-earned money.
Reconciliation made easy
2. ITC claim on earlier reversal
If GST credit has been reversed during the year on account of payment not made to suppliers within 180 days. Taxpayers can again claim the ITC after payment to the supplier which has been already reversed on non-payment. It is important to check the books of accounts for any such entry on which ITC can be claimed.
3. Checking credit for Reverse Charge
It is important to cross-check your books of account to confirm if you have paid GST under RCM for proper transactions at the appropriate rate and claimed the ITC for the same in the Financial Year 2021-22.
4. Cross-checking purchase bills with GSTR-2A and 2B
During the course of the year, there are multiple missed purchases or no invoice purchases, lost invoices etc. It is important to cross-check the purchases with the available GSTR 2A in order to get the audit right. Now since GSTR 2B is also available, taxpayers need to ensure that they take into account 2B as well.
5. Sale reversed after GST Paid
If the goods are rejected after a few days of the sale and the taxpayer has already paid the GST due on the sale, such differences also need to be pointed out. Reconciliation of GSTR-2A with the taxpayer’s books of accounts is necessary to claim ITC on the basis of Debit Note issued by the party.
6. GST reversal on purchases
If a taxpayer has rejected a part of goods purchased from the supplier and has issued a debit note, such entries are also important to take into account while reviewing the yearly books of account. If the supplier has not accepted the debit note, the taxpayer can reverse the entry to claim the GST ITC paid.
7. Collect ITC on Bank charges
Bank charges like processing fees and unit inspection charges also need to be claimed timely. Cash Credit accounts with banks have to pay ‘processing charges’ for renewal of C/C limits and also have to pay unit inspection charges which are directly debited to their C/C accounts by banks. Taxpayers can collect ITC on such transactions.
8. ITC on Job-work charges
If a taxpayer has taken any job work done via out-sourcing it to small vendors and they have provided GST invoices, then the taxpayer must claim the relevant ITC. Such small entries get missed in the due course of the year. Now is the time to check the books of account and get all such entries together for the ITC claim before filing the November 2021 return.
9. Claim ITC on small expenses like internet, telephone bills etc.
If the bills are in the name of your business and have the business address mentioned then you can claim ITC on the same. People tend to leave such small transactions; however, you can check such entries with GSTR-2A for the complete year and enjoy the benefit by claiming ITC.
10. ITC on Payment for Parcel/Postage/ Courier Charges
As mentioned in the above point, small transactions get ignored throughout the course of the year. But all these small transactions when seen together can save you a lot of money so do not miss taking them into account. Small expenses are not calculated accurately and are often ignored. You can check your GSTR 2A and carry out a proper reconciliation process.
Here is a list of ITC Claims a taxpayer may miss out on considering it a small or petty transaction. However, if all these expenses are made for office purposes and registered on the business name, then their ITC claim is possible. It is better to claim and settle these before November GST return.
Check out the list:
- ITC claim on Insurance of company vehicles
- Purchase of Office Furniture
- Purchase of electronic appliances for office such as Air Conditioner, Television etc.
- Drinking water made available to employees – water is not a beverage and is eligible for ITC Claim. According to the CGST Amendment Act 2018 section 17(5)(b) an employer is entitled to claim ITC on goods/ services which it is statutorily obligated to provide to its employees.
- Printing and Stationery Expenses made
- Office Rent Paid – a GST invoice is needed for the same. Only rent agreements and documents may not work in this regard.
- Business travel expenses of employees. A proper GST invoice needs to be acquired to claim ITC.
- Bills such as electricity and water to the respective boards.
These entries and transactions are crucial to address for an accurate closure of the financial year.