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.
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