[Opinion] Clause by Clause Analysis of ITC Disclosures in GST Annual Returns

CA Mahadev R, CA Ravi Kumar Somani & CA Yash Shah – [2022] 145 taxmann.com 448 (Article)

Introduction

The key foundation based on which the GST law is structured is that the tax is to be levied and collected only on the value-added portion. In India, we have a method by which the tax suffered at an earlier point of time is allowed to be reduced from the tax payable on the subsequent supplies made. This avoids tax on tax at each stage of the supply chain. The statement of objectives at the time of GST bill being introduced in 2014 clearly provided that the intention was to remove cascading effect of tax. Since, input tax credit is of paramount importance in the entire GST framework, therefore in this article we shall discuss key aspects relating to input tax credit that needs to be taken care while filing Annual returns under GST. Below is the table-wise disclosure requirement and its detailed explanation.

Table 6 – Reporting of gross input tax credit (ITC) availed by the registered person during the financial year

This table must be filled in based on the ITC availed in GSTR-3B filed for the financial year. Before filling the table, it is important to ensure that basic conditions for taking the input tax credits are fulfilled. The registered person needs to ascertain the following:

1. Assessee is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other taxpaying document(s) as prescribed in rule 36.

2. Assessee has received the goods and/or services. Where the goods or services are delivered/provided by the supplier to a recipient or any other person on the direction of such registered person, it is deemed that the registered person has received the goods.

3. The supplier should have paid the tax and details of the same are reflected in GSTR 2B.

4. The recipient has furnished the return under Sec 39 i.e., he has filed Form GSTR-3B.

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