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Dear Professional Colleagues,
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The Central Board of Indirect Taxes and Customs
(GST Policy Wing) issued Circular No. 193/05/2023-GST dated July 17, 2023 regarding Clarification to deal with difference
in Input Tax Credit (ITC) availed in FORM GSTR-3B as compared to that detailed
in FORM GSTR-2A for the period 01.04.2019 to 31.12.2021.
Below is the table summarising the benefit:
Illustration
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Period
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Credit
taken in GSTR-3B
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Matched
Credit as per GSTR-2A/GSTR-2B*
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Credit
mismatch
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Benefit
of Circular No. 183/15/2022-GST
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No
Benefit of Circular No. 183/15/2022-GST [ITC to be reversed]
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1-Jul-17
to 31-Mar-18
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500,000
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200,000
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300,000
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300,000
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NA
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1-Apr-18 to
31-Mar-19
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500,000
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200,000
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300,000
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300,000
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NA
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1-Apr-19
to 8-Oct-19
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500,000
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200,000
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300,000
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300,000
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NA
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9-Oct-19 to
31-12-19
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500,000
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200,000
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300,000
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40,000
[ 20% of ITC matched]
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260,000
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1-Jan-20
to 31-Dec-20
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500,000
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200,000
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300,000
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20,000
[10% of ITC matched]
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280,000
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1-Jan-21 to
31- Dec-21
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500,000
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200,000
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300,000
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10,000
[5% of ITC matched]
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290,000
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1-Jan
2022 onwards
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500,000
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200,000
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300,000
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NA
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300,000
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*From 1st
Jan 2022, matching of credit vis a vis GSTR-2B shall be considered.
Further,
for the periods from Feb’20 to Aug’ 20 and Apr’21 to Jun’21, ITC computation
shall be considered on cumulative basis while determining the ITC eligibility
for the benefit of Circular No. 183/15/2022-GST.
AMRG
Take:
The
extension of benefit allowed under Circular No. 183/15/2022-GST dated 27th
Dec 2022 is a welcome step. However, it will have its own procedural challenges
and may open another set of litigations. Below are the key concern areas which
may arise post this Circular:
- Monthly computation instead of
Cumulative for financial year : The reference
to cumulative computation for the specific periods from Feb’20 to Aug ‘20
and Apr’21 to June’21 and rest on the tax period basis i.e. monthly. Thus,
following the procedure as specified in Circular for monthly mismatches
would be challenging and tedious.
- Potential litigation due to
emphasis on monthly matching: During assessments, normally
the tax authorities disallowed the ITC mismatches on financial year basis.
However, the Circular emphasis on tax period (monthly). Shifting
from the usual financial year basis to monthly matching and following the
procedure thereon can give rise to new sets of litigations. This is
because taxpayers and tax authorities may interpret the provisions
differently, leading to disputes over the correct interpretation and
application of the new assessment method.
- Cross-financial year
transactions: For the period from Feb’20 to
Aug’20, the Circular specifies that the officer has to apply the procedure
based on the cumulative benefit provided to the tax- payers. However, the
circular doesn’t clear specify how the same has to be applied. This may
lead to some level of complexity, especially for businesses with a large
volume of transactions across multiple financial years.
- Procedural difficulties for
documents incase of incremental ITC :
Determining which vendor a specific incremental Input
Tax Credit (ITC) pertains to, especially when matching transactions across
financial years, can be a challenging task for businesses.
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Hope you find it interesting and useful to read. For any clarification/ feedback, feel free to write us at amrg@amrg.in.
Best regards,
AMRG Team
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About Us
AMRG & Associates is an established Chartered Accountants firm. It came into existence in 1984 and since then has grown its branches across major Indian cities such as Delhi, Mumbai and Chandigarh. Since its inception, it has become one of the leading chartered accountants’ firms in North India. AMRG & Associates offers its clients a wide range of exceptional services through the expertise of its highly motivated group of trained professionals. The firm provides expertise in financial and business advisory, tax and regulatory, audit and assurance and risk advisory services. AMRG & Associates has a client base of 200+ companies & individuals. The firm's approach to service delivery helps to provide value-added services to its wide clientele. Our differentiation is derived from a rapid performance based, industry-tailored and technology-enabled business advisory services delivered by talented professionals in the country.
Corporate office (Delhi, India) : AMRG Tower, 23, Paschim Vihar Extension, Main Rohtak Road, New Delhi -110063, T - 011-47322696 / 97 Branch office (Mumbai, India) : Shop no 14,Adarsh Nagar Bldg No 4,Kolbad, Thane West 400601. Branch office (Sydney, Australia) : Unit 9, 14-15 Junia Avenue, Toongabbie NSW 2146, Sydney, Australia. International Desk (USA) : Wiener & Garg LLC 6000 Executive Boulevard, Suite 520 | Rockville, MD 20852, T - 301.881.4244 | D - 240.833.4002 © -2022 AMRG & Associates All Rights Reserved. This document has been written for the general interest of our clients and professional colleagues and is subject to change. This document is not to be construed as any form of solicitation. It is not intended to be exhaustive or a substitute for legal advice. We cannot assume legal liability for any errors or omissions. Specific advice must be sought before taking any action pursuant to this document.
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