GSTR-2A and GSTR-2B: A Guide for Taxpayers

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Published Date:  22-08-2023   Author:   ca-abhishek-mundhra
captainbiz gstr a and gstr b a guide for taxpayers

Need for GSTR-2A:

When GST was introduced in 2017, taxpayers were required to file two returns, GSTR-1 and GSTR-3B. In GSTR-3B, taxpayers were claiming ITC on self-assessment basis and there was no basis or check available with the department. In September 2018, the government introduced a new Form GSTR-2A which would be auto-populated from GSTR-1 filed by the suppliers and the taxpayers could check and claim the ITC available to them based on such GSTR-2A reports. A new rule was then inserted w.e.f. 9th October 2019 which made it mandatory to claim ITC as per GSTR-2A.

Limitations of GSTR-2A:

Through GSTR-2A the taxpayers could check whether their suppliers have passed on the ITC credits or not and claim the same. Practical issues started cropping in while claiming credits based on these reports. The data in GSTR-2A was dynamic in nature and there were real time changes in the data as soon as any of the supplier filed their return.

E.g., If any supplier had filed its GSTR-1 for April 2023 in the month of June 2023, then the credits from that will flow to the GSTR-2A for April 2023. Because of this, the ITC data in 2A were changing after the GSTR-3B was filed by the purchaser for the respective month. Because of this, reconciling ITC on a month-to-month basis was a challenging task.

Introduction of GSTR-2B and its uses:

To address this issue, the government introduced Form GSTR-2B in August 2020, wherein the data would be static and would not impact ITC appearing for a particular month if there was a delay in the filing of Form GSTR-1 by the suppliers. The government set the cutoff date for the generation of GSTR-2B as 12th of the month and later changed it to 14th of the month. If any of the suppliers files a late return, then the ITC will flow to GSTR-2B for the month in which the same is filed. Though the ITC in GSTR-3B has to be mandatory claimed from GSTR-2B, the relevance of GSTR-2A is not lost. GSTR-2A is a consolidated report of ITC for a particular month, whereas GSTR-2B is a report that lets the taxpayers know in which month the ITC can be claimed. Reconciliation of GSTR-2A and GSTR-2B can help taxpayers understand the flow of credits from appearing in GSTR-2A to their relevant month in GSTR-2B.

Read More: Unlocking the Potential of GSTR-2B Reconciliation

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Introduction of Rule 88D:

Moreover, on 4th August 2023, to ensure strict compliance of ITC claims, the government has notified a new rule 88D, where the ITC claimed by the taxpayer in a month will be compared with the ITC available in GSTR-2B for that month. If there is any excess claim for ITC, then the taxpayers will be issued a notice asking for an explanation for the differences. The same has to be satisfactorily replied within 7 days, or the taxpayer will have to pay the differential liability. Non-compliance with the same will result in blocking the filing of GSTR-1 for next month.

It will be interesting to see what documents will be accepted once the notice is served, how the notices will be addressed or be resolved? What happens when the portal has a technical error on the last day? What happens in case of genuine hardships? What if the supplier filing quarterly returns doesn’t file the optional IFF returns? This amendment may help with better governance backed with discipline. Or will we see more amendments? Only time can tell…

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CA Abhishek D Mundhra

Abhishek D Mundhra is a Chartered Accountant with 12+ years of post qualification experience with expertise in the field of GST and other Direct and Indirect Taxes.

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