The Goods and Services Tax Network (GSTN) recently issued an advisory dated 14/11/2023 regarding the reversal of input tax credit (ITC) under CGST Rule 37A. This rule requires taxpayers to reverse ITC availed on invoices/debit notes furnished by suppliers in their GSTR-1, where the supplier has not filed their GSTR-3B return for the said period.
The advisory aims to facilitate taxpayer compliance with the legal requirement to reverse such ITC by 30th November, 2023 for the financial year 2022-23. It summarizes key aspects like the ITC reversal requirement, role of GSTN in computing reversal amounts, and the specific action to be taken by taxpayers while filing GSTR-3B returns. This article examines the key highlights of the GSTN advisory and its implications for taxpayers.
Overview of CGST Rule 37A
CGST Rule 37A requires taxpayers to reverse the Input Tax Credit (ITC) availed on invoices or debit notes furnished by suppliers in their GSTR-1/IFF, but for which the supplier has not filed their GSTR-3B return for the said period till 30th September following the end of the financial year.
ITC Reversal Requirement
As per the rule, the ITC amount is to be reversed while filing GSTR-3B on or before 30th November following the end of the financial year. This is a legal obligation for taxpayers who have availed ITC on such invoices/debit notes.
GSTN Advisory to Facilitate Compliance
To facilitate compliance, GSTN has computed the ITC reversal amount for FY 2022-23 required as per Rule 37A. This amount has been communicated to the concerned taxpayers via email to their registered email IDs.
Key Action Point for Taxpayers
Taxpayers have been advised to take note of the ITC reversal amount communicated by GSTN. They need to ensure this ITC is reversed as per Rule 37A before 30th November, 2023 in Table 4(B)(2) of GSTR-3B while filing the return for the relevant period.
The GSTN advisory aims to facilitate taxpayer compliance with CGST Rule 37A regarding ITC reversal. Taxpayers should review the ITC reversal amount, understand the legal requirement, and take necessary action to reverse ITC while filing GSTR-3B returns.