The Council also suggested that the provision should step in if the difference is more than 20% and more than Rs 25 lakh.
The Goods and Services Tax (GST) Council is likely to decide on a new rule in GST law for companies and business owners. They are required to explain the reasons to claim excess Input Tax Credit (ITC) or else, they might need to deposit the excess amount to the government treasury.
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The committee set up for the purpose includes tax officers from the Centre and states stated where the ITC availed GSTR-3B return exceeds the amount in accordance to the auto-generated statement GSTR-2B by a specific amount, then they are liable to explain the difference or pay the excess along with the ITC along with the interest.
The GSTR-3B form is a simplified summary return, and the goal of the return is for taxpayers to disclose and discharge their summary GST liabilities for a specific tax period, whereas GSTR-2B is the monthly tax return that shows the purchases you have made in the month.
The Council also suggested, as per reports, that the provision should step in if the difference is more than 20% and more than Rs 25 lakh. The GST council is yet to take the final decision on the recommendations by the committee on July 11.
If the difference in tax liability declared in GSTR-1 and GSTR-3B exceeds the specific limitation of Rs 25 lakhs and 20% then the businesses are liable to explain the difference or deposit the taxes. The Committee also suggested that the registered person will not be allowed to file a monthly statement of outward supplies or GSTR-1 unless he provides a proper explanation of the reason for the discrepancy according to the satisfaction of the tax officer or deposits the excess ITC.
GSTR-1 is the monthly statement of outward supplies to be furnished by all registered taxpayers.
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The Directorate General of GST Intelligence (DGGI) detected an invasion of over Rs 1.01 lakh in the fiscal year of 2022-23, double that of the previous year, and booked approximately 14,000 cases. The Council aims to curb instances of fake invoicing, fraudsters usually choose this path to avail of ITC. The authorities have already initiated a two-month drive to excavate fake registrations. It is observed that these registrations usually take place to issue fake invoices and defraud the finances.
The GST had taken a similar move last month in case of a mismatch in tax liability declared in GSTR- 1 and tax paid in GSTR- 3B. The GSTR-2B is an auto-drafted ITC statement that indicates the availability and non-availability of ITC to the taxpayer against the documents filed by the suppliers.
