Dealing with differences of ITC in GSTR-2B VS GSTR-3B
On 4th August, 2023, the Central Board of Indirect Taxes and Customs vide Circular No.38/2023 had notified the Central Goods & Service Tax (CGST) rules, 2023 with Rule 88D accompanied by Form DRC-01C. It addresses the disparities between Input Tax Credit (ITC) available as per GSTR 2B (an auto generated statement) and ITC availed while filing return i.e. GSTR 3B.
Rule 88D
It specifies the manner in which the mismatch between ITC available as per GSTR-2B and ITC availed in GSTR-3B is to be dealt with. The taxpayer has the following two options to correct the above mentioned mismatch:
- Pay the excess ITC availed in GSTR 3B which is not reflecting in GSTR 2B along with interest payable under section 50 through form GST DRC-03 or,
- Provide reasons for the aforesaid difference in ITC on common portal within 7 days from date of intimation.
Form GST DRC-01C:
It is a system generated form which is available on the common portal. It is divided into the following 2 parts:
- Part A specifies the excess ITC availed in GSTR 3B which is not available as per GSTR 2B. Tax payer is intimated about this difference through part A of form DRC-01C on the common portal. A copy of this form is also sent on the e-mail address of the tax payer.
- If the tax payer has valid reasons for claiming excess ITC in GSTR 3B, then a reply can be furnished, electronically, in Part B of Form DRC-01C within a period of 7 days.
Consequences of Rule 88D
- If any taxpayer fails to pay the amount specified in Part A of form DRC-01C or fails to furnish the reasons in Part B of form DRC-01C then the tax payer will not be able to file GSTR-1/IFF for the subsequent period.
- Also, tax payer will be liable to pay the amount of excess ITC along with interest and may also be subject to other penalties.
Actions taken by GST authorities
In case tax payer does not pay the amount of excess ITC or reasons for differences or the reasons/explanations by taxpayer are not found acceptable by the proper officer, the said amount shall be liable to be demanded in accordance with the provisions of section 73 or section 74 of the GST Act, 2017.
Differences among forms DRC-01A, DRC-01B & DRC-01C:
Form DRC-01A | Form DRC-01B | Form DRC-01C |
It is generated to intimate the tax payer of total Tax, interest and penalty payable. | It is generated to intimate the difference between liability declared in GSTR 1 and tax paid in GSTR-3B. | It is generated to intimate the difference between ITC available as per GSTR 2B and ITC availed as per GSTR 3B. |
Authors:
Nishika Acharya
Senior Associate at MASD & Co | Email: nishika.acharya@masd.co.in
Pravin Jain
Associate at MASD & Co | Email: pravin.jain@masd.co.in