In GST, we must understand importance of GSTR 2B as it is now like cash wallet in modern days. GSTR 2B will be available at GST portal for each month.
In this article we are providing basics of GSTR 2B (What is GSTR 2B and input tax credit, how it gets generated/reflected, its importance and importance of reconciliation under GST).
- What is GSTR 2B?
- Form GSTR 2B is an auto generated Input Tax Credit Statement, it will be generated for GST registered person as per the data filled by the suppliers in their respective forms GSTR 1(Generally). GSTR 2B will show that the input tax credit is available or not for every document filed by the supplier.
- GSTR 2B is a static month-wise auto-drafted statement for regular taxpayers (whether opted into the QRMP scheme) introduced on the GST portal.
- In simple language it will show how much input tax credit can be taken while filling GSTR 3B.
- What is Input Tax Credit (ITC)?
- Input Tax Credit is a tax that GST registered person pays on a purchase and that it can be used to reduce its tax liability when person makes a sale.
- Input Tax Credit can be used to set off tax against Output Tax. A manufacturer, supplier, e-commerce operator or agent is eligible to claim such input tax credit if he is registered under GST subject to certain conditions.
- How does Input Tax Credit get reflected in GSTR 2B?
- While filling GSTR 1 (Its sales returns, Invoice wise details needs to be provided), we need to provide GST Registration number of purchaser.
- For the purchaser, to claim Input Tax Credit he should make sure that the seller has the purchaser’s GSTIN number. As well as in case of sale, our GSTIN number must be provided to purchaser.
- Input Tax Credit gets reflected when the purchaser enters the invoice wise details therein.
- Change in Input Tax Credit getting reflected in GSTR 2B –
- ITC claims will be allowed only when the details of such invoice or debit note have been furnished by the supplier in his GSTR-1 and subsequently, it appears in GSTR-2A/2B.
- From 1-1-2022, Input Tax Credit will be allowed only when the details of such invoice or debit note have been furnished by the supplier in his GSTR 1 and subsequently, it appears in GSTR 2A, 2B of that month. So, the taxpayers can no longer claim provisional ITC under the CGST Rule 36(4) and ensure every ITC value claimed gets reflected in GSTR 2B.
- In case of failure of providing information from our side or not furnishing the provided data from supplier’s side will restrict us from claiming ITC even if we possess the details of concerned bill.
- Impact of such change –
- In case of failure providing ITC by supplier, it will lead to blockage of working capital for purchaser. Purchaser can’t claim ITC unless it gets reflected in GSTR 2B of respective month.
- In case of failure of ITC getting reflected in 2B, the purchaser is required to make payment of GST again to government even though same is paid to purchaser at the time of purchase.
- Such ITC paid can be claimed in month in which said ITC gets reflected in GSTR 2B.
- In case if supplier fails to update such details in subsequent months, purchaser won’t be able to claim such ITC.
- How to get details of GSTR 2B and keep track?
- Invoice wise reconciliation of our records with the details entered by supplier in GSTR 2B will help identify the differences.
- The differences identified should then be communicated to the supplier for updating in subsequent month. The details of the ITC not provided should be communicated.
- We should make sure that our GSTIN is provided to supplier at time of purchase itself.
- Indirectly, Purchaser needs to ensure supplier is filling GSTR1 that too in time.
Important Summary
- From 01.01.2022, without ITC getting reflected in GSTR 2B, we can’t claim the same.
- While filling GSTR 1, same should get filled before due date.
- GSTR 1 should contain correct details.
- Non reflection of ITC in 2B will amount to double payment of GST (To Purchaser and To Government).
- Importance should be given to timely reconciliation and follow up to avoid credit loss or payment of interest.
Disclaimer
This information is provided in very simple language to understand importance of GSTR 1/2B and Input Tax Credit. Its an attempt to make it understand without giving any reference/provisions from GST Act/Rules. There is possibility that in act/rules many more provision/conditions are available. Hence before taking any decision based on this information discuss with GST consultant to avoid any conflict. It is just for information and firm or any partner/associate/staff/article of firm will not be liable for any claims/liability arising out of this article/information. This for information and private circulation and not an advertisement..