Government tweaks GST rules for claiming input tax credit

A taxpayer under Goods and Services Tax (GST) will be required to reverse the input tax credit (ITC) claimed by November 30 in case his supplier has failed to deposit the dues taxes by September 30, the finance ministry has said Tuesday. Also now PAN-linked mobile and e-mail can be used along with biometric authentication or GST Registration. The Central Board of Indirect Taxes and Customs(CBIC) has notified many decisions taken by the GST council in its 48th meeting held on December 17.

The CBIC has notified the new provision by inserting Rule 37A in Central Goods and Services Tax as recommended by the 48th GST council. The taxpayers can reclaim the ITC later following deposit of taxes by the supplier.

Experts said that businesses must take note of these changes.


"Insertion of Rule 37A merits attention as the same provides for the instances and the manner where ITC is required to be reversed in case of non-payment of tax by supplier," KPMG in India, Partner Indirect Tax, Abhishek Jain.

The CBIC has also inserted a new rule, 88C, by amending the Central Goods and Services Tax Rules, 2017. Rule 88C lays down the manner of dealing with difference in liability reported in statements of outward supplies and that reported in return. This is likely to affect the taxpayers in case of any inconsistency in filings of GSTR-1 and GSTR-3B. The onus will be on the taxpayers to ensure compliance.

The centre also notified the amendments to the Central Goods and Services Tax (CGST) Rules, 2017, mandating the mobile number and email linked to PAN to be verified by One Time Passwords (OTPs).

It has also made necessary changes for allowing unregistered suppliers and composition taxpayers to make intra-state supply of goods through E-Commerce Operators (ECOs).

Experts say while this will plug the revenue leakage, this will also increase the compliance burden.

"The amendments made would further increase the onus of compliances on the recipient of goods / services. It is advisable that industry should look at digitalising this process of compliance either through IRP or through ASPs in order to avoid undue leakages in the system," Saurabh Agarwal, Tax Partner, EY said.