Matching Input Tax Credit Under Gst

GST is an indirect tax that is levied on the consumption of goods and services in India. Since GST is levied in every stage of value addition, an input tax credit mechanism is used to set off the cascading effect of tax and ensure that tax is passed on to the end consumer. Thus, there exists a robust system for matching

input tax credit under GST and in this article, we look at that system in detail.

Matching Input Tax Credit

All taxable person under GST are required to file monthly GST returns with details of all outward supplies, inward supplies and tax payable. Hence, in

GSTR-1, all persons registered under GST are required to furnish details of the outward supplies made by them in the previous month. The taxpayer shall file GSTR-1 before the 10th of each month. On 15th of every month, following the filing of GSTR-1, GSTR-2 must be filed by all registered businesses providing details of all inward supplies. The portal provides the auto-populates details of inward supplies as provided in GSTR-1 in GSTR-2. Hence, the taxpayer can accept, reject or modify the details from GSTR-1 filings. Thus in GSTR-2 filing, the matching of input tax credit happens based on the following data points:

GSTIN of the supplier;
GSTIN of the recipient;
Invoice or debit note number;
Invoice or debit note date; and
Tax amount

Since the framework of GST inter-relates all the forms for matching of various data points, extending the time limit for filing GSTR-1 shall extend the time limit for other related forms, as prescribed in the GST rules.

Mismatch of Input Tax Credit

If there is a mismatch in the input tax credit, then the details of mismatch in input tax credit will be made available to the recipient in Form GST MIS-1 and Form GST MIS-2 to the supplier on the GST common portal on or before the last date of the month in which the matching has been carried out. Based on the details of mismatch provided on the GST Common Portal, suppliers can make suitable rectifications in the statement of outward supplies for the month in which the discrepancy is made available. Also, for recipients with a mismatch in the input tax credit can make rectification in the statement of inward supplies for the month in which the discrepancy is made available. If the discrepancy of mismatch in input tax credit stays uncorrected, then the amount of discrepancy shall add along with the output tax liability of the recipient, while furnishing the return FORM GSTR-3.

Acceptance of Input Tax Credit

The final acceptance of the claim of the input tax credit for any tax period is provided electronically to the registered person in FORM GST MIS-1 through the GST Common Portal. For income tax filing and GST registration,

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Frequently Asked Questions

Common questions about Matching Input Tax Credit under GST.

The purpose of matching input tax credit under GST is to ensure that the input tax credit claimed by a recipient of goods or services is valid and matches the corresponding outward supply details provided by the supplier. This mechanism aims to prevent fraudulent claims and ensure that tax is passed on to the end consumer accurately.

The matching of input tax credit under GST happens through the filing of GSTR-1 and GSTR-2 returns. GSTR-1 contains details of outward supplies made by the taxpayer, while GSTR-2 contains details of inward supplies received by the taxpayer. The GST portal auto-populates the details of inward supplies in GSTR-2 based on the corresponding GSTR-1 filings, allowing the taxpayer to accept, reject, or modify the details.

The key data points used for matching input tax credit under GST are the GSTIN (GST Identification Number) of the supplier, GSTIN of the recipient, invoice or debit note number, invoice or debit note date, and the tax amount.

If there is a mismatch in the input tax credit, the details of the mismatch are made available to the recipient in Form GST MIS-1 and to the supplier in Form GST MIS-2 on the GST Common Portal. Both parties can then make suitable rectifications in their respective statements of supplies for the month in which the discrepancy is made available.

If the discrepancy in input tax credit remains uncorrected, the amount of discrepancy shall be added to the output tax liability of the recipient while filing the return FORM GSTR-3. This ensures that the tax is eventually paid to the government, even if there is a mismatch in the input tax credit claim.

The final acceptance of the claim of input tax credit for any tax period is provided electronically to the registered person in FORM GST MIS-1 through the GST Common Portal.

Since the framework of GST inter-relates all the forms for matching of various data points, extending the time limit for filing GSTR-1 shall automatically extend the time limit for other related forms, such as GSTR-2, as prescribed in the GST rules.

Under GST, taxpayers are required to file monthly returns. GSTR-1 must be filed before the 10th of each month, providing details of outward supplies made in the previous month. GSTR-2, containing details of inward supplies, must be filed by the 15th of every month.

The matching of input tax credit under GST is crucial to prevent fraudulent claims and ensure that the tax is passed on to the end consumer accurately. It helps maintain the integrity of the GST system and ensures that the cascading effect of tax is set off appropriately.