News & Updates

Does The Invoice on Your GSTR 2B Matter?

Section 16 of the CGST Act, 2017 pre-budget status
Section 16(1) of the CGST Act, 2017 is quoted below
Every registered person shall, subject to such conditions and restrictions as may be prescribed and, in the manner, specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person.
Section 16(2) specifies the conditions.
Section 16(2) of the CGST Act, 2017 is quoted below
Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless,
* he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax paying documents as may be prescribed;
* he has received the goods or services or both. Explanation. - For the purposes of this clause, it shall be deemed that the registered person has received the goods or, as the case may be, services-
* where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise;
* where the services are provided by the supplier to any person on the direction of and on account of such registered person;
* subject to the provisions of section 41, the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilisation of input tax credit admissible in respect of the said supply; and
* he has furnished the return under section 39:
Section 41 of the CGST Act, 2017 is quoted below.
Claim for and provisional receipt of an input tax credit
(1) Every registered person shall, subject to such conditions and restrictions as may be prescribed, be entitled to take the credit of eligible input tax, as self-assessed, in his return and such amount shall be credited on a provisional basis to his electronic credit ledger.
(2) The credit referred to in sub-section (1) shall be utilised only for payment of self- assessed output tax as per the return referred to in the said sub-section. Even if the particular supplier has not actually paid the ITC to the Government, the Assessed is qualified to receive it, and it will be credited on a temporary basis.
Let's analyse Pre-budget Section 16 (2) of CGST Act, 2017
The assessed was qualified for ITC if he met all of the requirements listed in this sub-section, i.e.
* Invoices or debit notes in possession
* Goods or Service Receipt
* Submission of a return pursuant to Section 39
* Subject to Section 41, payment of tax by the supplier to the Government. Section 41 allows the Assessed to avail ITC even if the same has not been paid by the Supplier to the Government and it will be accepted provisionally.
When we closely examine the situation, we see that there is no express need that the Supplier provide the information of the invoices or debit notes in the statement of Outward Supplies under Section 37, i.e., GSTR 1.
Conclusion
Thus, taxpayers would only be able to claim ITC on invoices that have been uploaded by the supplier in GSTR 1 / IFF and reported to the registered person in Form GSTR 2B.