GST authorities issue notices over input tax credit discrepancies

Goods and services tax (GST) authorities have issued notices to several companies for discrepancy in claim of input tax credit, or ITC, people aware of the matter said. This follows close scrutiny of input tax availed by the companies and mismatch with their annual return.

The notices have been sent under Section 150 of the CGST Act, 2017. The department has asked the taxpayers to file an information return, giving details of the reason for the "short reporting" of input tax credit. ET has seen some of the notices that were issued by the GST authorities.

"Short reporting" happens when the input tax credit in the annual return form, or GSTR-9, is less than the input tax credit claimed in the monthly form--GSTR-3B or GSTR 2B. The GSTR-3B is generally a self-declared summary of the GST return filed every month, where taxpayers need to report the summary figures of sales, ITC claimed, and net tax payable. GSTR-2B is an auto-drafted form which provides eligible and ineligible ITC for each month.


Most of the notices were sent in January this year for the April to November period of 2023-24.

Businesses and experts say while the law authorises officials to ask for the information return, most of the notices are sent in a mechanical way - without verifying, whether taxpayers have availed the ITC or not - increasing compliance burden.

"Some notices have mechanically instructed taxpayers to reverse even unclaimed ITC in GSTR-3B, without any application of mind," Rajat Mohan, executive director of Moore Singhi, said, adding how can a taxpayer reverse an ITC which is unclaimed.

In a post-budget interview with ET, Central Board of Indirect Taxes and Customs chairman Sanjay Kumar Agarwal said the department cannot ignore an ITC mismatch when it shows up in the system.