Effects of Section 38 of CGST Act, 2017

Pranav Kohli – [2022] 135 taxmann.com 181 (Article)

The revised Section 38 was proposed in Finance Bill 2022 in a bid to further tighten input tax credit (ITC) claims, owing to the extent of ITC fraud that takes place by way of fake entities and fake invoices. The existing Section 38 of the CGST Act is titled ‘Furnishing details of inward supplies’. It governed the furnishing of details of outward supplies by a supplier, followed by the recipient (buyer) accepting such inward supplies and claiming ITC on the same.

In this article, the author has analysed and decoded revised Section 38 with the help of practical examples to explain the impact on ITC Claims as per existing and proposed Section 38 of CGST Act, 2017. The revised Section 38 has not yet been passed by parliament nor notified for taxpayers at the moment. However, it could become part of the GST law in the months to come.

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