GST ITC now Auto-populates in GSTR-2B for Reversal under Rule 37

The Goods and Services Tax Network (GSTN), in accordance with Rule 37A of the Central Goods and Services Tax Rules, has implemented a procedure for the reversal of Goods and Services Tax (GST) Input Tax Credit (ITC) when the supplier is unable to file the GSTR-3B return through the GST Portal.

The following are the essential details and implications of Rule 37A and the changes made in GSTR-2B:

ITC Reversal for Non-compliance Suppliers Under Rule 37A

Reversal Requirement: If a supplier fails to file their GSTR-3B return for a given tax period by the 30th of September following the end of the relevant financial year, the receiver must reverse the applicable ITC. The same assures that GST ITC claims are only available if suppliers have completed their GST return liability.

Timeline of GST Compliance

Suppliers must file their GSTR-3B returns for the financial year listed below by September 30th.

If the supplier fails to comply, the receiver must reverse the ITC by November 30th (or November 20th, the deadline for October’s GSTR-3B).

Update in GSTR-2B: Auto-Population of ITC Reversals under Rule 37A.

Reclaiming GST ITC: Once the supplier files their GSTR-3B, the recipient can reclaim the reversed ITC in subsequent tax periods. The same reclamation is reported in the appropriate parts of GSTR-3B (Tables 4B and 4D).

The new GST portal upgrade allows GSTR-2B to automatically generate ITC reversals under Rule 37A. This simplifies the compliance procedure for taxpayers by allowing them to recognize and reverse the connected ITC to suppliers who have not filed their GSTR-3B.

Steps For Establishing GST Compliance Under Rule 37A

Reversal in GSTR-3B: If any supplier is unable to file their GSTR-3B by the deadline for the recipient’s October GSTR-3B, the assessee should temporarily reverse the ITC in Table 4B(2) of the return.

ITC Reclaim: Once the suppliers have filed their due returns, the taxpayer may reclaim the reversed ITC by reporting it in Table 4B(5) and reflecting it in Table 4D(1) in future GSTR-3B filings.

Detect Non-compliant Suppliers: The assesses must examine their GSTR-2B statement for September 2024 to identify the suppliers who are unable to file their GSTR-3B for the applicable period.

Follow-Up with Suppliers: To prevent ITC reversals, non-compliant suppliers should be approached and asked to file their GSTR-3B before the taxpayer submits their October 2024 return.

The same improved functionality aims to make the filing process easier for taxpayers by reducing manual input and enhancing ITC reporting accuracy. Assesses are encouraged to examine their GSTR-2B and authenticate the information presented on the GSTR-9 return utilizing the revised facility for easier submission.

Previously, taxpayers were required to reconcile the ITC claimed in FORM GSTR-3B with the data presented in FORM GSTR-2A, as per sub-rule (4), which was introduced into Rule 36 of the Central Goods and Services Rules, 2017 (“the CGST Rules”), which goes into effect on October 9, 2019.