Rajasthan Government has issued circular for filing Correct GST Returns

GST has become the backbone of almost every business unit in India. Various compliances have to be followed by the business under GST viz registration, return filing, tax payment, etc. Accurate and timely GST compliances play a pivotal role in the smooth functioning of a business.

GST return filing is the most important compliance to be followed by businesses. The supply invoices reported in GSTR 1 by one taxpayer become the evidence for claiming the input tax credit for the other taxpayer. A taxpayer has to satisfy various conditions for claiming the input tax credit under GST. One of these conditions provides that a recipient can only claim the input tax credit if it is reflecting in Form GSTR 2A/2B. This matching concept of ITC helps the taxpayers in the easy flow of credit.

When a supplier files his GSTR 1, he reports all his B2B supply invoices along with the GSTIN of the customers for the flow of credit. This ITC then auto-populates in the recipient’s GSTR 3B under the ITC section. However, a taxpayer should make the following adjustments to the ITC for making the correct claim:

1. Reversal of ITC u/s 42 and 43 of the CGST Rules.

2. Reporting of blocked ITC u/s 17(5) of the CGST Act, 2017

For the government, there is a serious drawback because of this auto-population of ITC in GSTR 3B. The taxpayers are claiming excess ITC in their GSTR 3B by not making the required adjustments and thereby resulting in revenue loss to the Government.

The GST department of the Rajasthan government has recently issued a circular dated 05.04.2022 to remind the registered taxpayers of the state to claim the correct ITC while filing their subsequent month GSTR returns.

The circular provides that Section 53 of CGST Act/RGST Act and Section 17, 18 of the IGST Act read with the Goods and Services Tax Settlement of Funds Rules, 2017 provides for the manner of cross utilization of IGST or may be of SGST and apportionment of IGST between Centre, States and within State for settlement or transfer of funds from the Centre to State or vice versa.

It has come to the notice that in some instances, the taxpayers have not disclosed ineligible ITC in GSTR-3B on account of IGST paid on inward interstate supply and import supplies which might have culminated in short transfer of IGST funds to the state. The taxpayers are required to declare the ITC correctly in the monthly return GSTR-3B. The eligible ITC is auto-populated in Table 4 of GSTR-3B which can be edited by the taxpayer. In this context, attention is drawn towards the provisions of Rule 42 or as the case may be Rule 43 wherein the taxpayers have to report the reversal of ITC in Table 4(B)(1) and any other reversal or reversal as per the provisions of rule 37 shall be reported in Table 4(B)(2). Moreover, the ineligible ITC as per the provisions of Section 17(5) has to be reported in Table 4(D)(1) whereas the Table 4(D)(2) shall include the ineligible/blocked credit as per the provisions of Section 17(4) of the CGST/RGST Act read with Rule 38 and shall also include other ineligible ITC like ITC availed wrongly in the previous period, etc.

In light of the above, all the taxpayers who have not furnished details of ineligible ITC or have furnished the details of ineligible ITC partially or have not reported the reversal of ITC fully or partially in the returns filed for the F.Y 2021-22 shall report it in the annual return to be filed in GSTR-9 whereas, for the F.Y 2022-23 onwards, the details of ineligible ITC or partial details of ineligible ITC or reversal of ITC which has not been reported fully or partially shall be reported in the subsequent GSTR-3B to be filed by giving net effect in that return.

Therefore the taxpayers must ensure that they follow the guidelines of the circular precisely and file the subsequent periodic returns in GSTR-3B correctly.

To Read Circular Download PDF Given Below: