Background:
Earlier, the 50th Meeting of the GST Council was held on July 11, 2023 in New Delhi, wherein it was recommended to insert Rule 88D and Form DRC-01C in the Central Goods and Services Tax, Rules, 2017 (“the CGST Rules”) to provide the system-based intimation mechanism in respect of the excess availment of ITC in Form GSTR-3B vis-à-vis Form GSTR-2B by the taxpayer above a certain threshold. Further, it was recommended to prescribe the procedure of auto-compliance on the part of the taxpayers, to explain the reasons for the difference or take remedial action regarding such differences.
The above-mentioned recommendation has been notified vide the following notification:
Notification:
Now, In order to align the CGST Rules with recommendations of the 50th GST Council Meeting the CBIC vide Notification No. 38/2023 – Central Tax dated August 04, 2022 issued ‘the Central Goods and Services Tax (Second Amendment) Rules, 2023’ to further amend the CGST Rules.
After rule 88C, the following rule shall be inserted, namely–
“88D. Manner of dealing with difference in input tax credit available in auto-generated statement containing the details of input tax credit and that availed in return.-
(1) Where the amount of input tax credit availed by a registered person in the return for a tax period or periods furnished by him in FORM GSTR-3B exceeds the input tax credit available to such person in accordance with the auto-generated statement containing the details of input tax credit in FORM GSTR-2B in respect of the said tax period or periods, as the case may be, by such amount and such percentage, as may be recommended by the Council, the said registered person shall be intimated of such difference in Part A of FORM GST DRC- 01C, electronically on the common portal, and a copy of such intimation shall also be sent to his e-mail address provided at the time of registration or as amended from time to time, highlighting the said difference and directing him to—
(a) pay an amount equal to the excess input tax credit availed in the said FORM GSTR-3B, along with interest payable under section 50, through FORM GST DRC-03, or
(b) explain the reasons for the aforesaid difference in input tax credit on the common portal, within a period of seven days.
(2) The registered person referred to sub-rule (1) shall, upon receipt of the intimation referred to in the said sub-rule, either,
(a) pay an amount equal to the excess input tax credit, as specified in Part A of FORM GST DRC- 01C, fully or partially, along with interest payable under section 50, through FORM GST DRC-03 and furnish the details thereof in Part B of FORM GST DRC-01C, electronically on the common portal, or
(b) furnish a reply, electronically on the common portal, incorporating reasons in respect of the amount of excess input tax credit that has still remained to be paid, if any, in Part B of FORM GST DRC-01C, within the period specified in the said sub-rule.
(3) Where any amount specified in the intimation referred to in sub-rule (1) remains to be paid within the period specified in the said sub-rule and where no explanation or reason is furnished by the registered person in default or where the explanation or reason furnished by such person is not found to be 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, as the case may be.”
Impact of the Notification:
The system will now compare the ITC available in GSTR-2B with ITC availed in GSTR-3B and if the ITC availed in GSTR-3B exceeds ITC available in GSTR-2B by the prescribed amount and percentage, such difference will be electronically intimated to the taxpayer in Part A of FORM GST DRC-01C, along with the copy on email, which the taxpayer is required to respond in Part B of FORM GST DRC-01C within 7 days on the common portal or is required to pay the amount equal to the excess input tax credit availed in GSTR-3B along with the with interest section 50, through FORM GST DRC-03.
The Notification can be accessed at: https://taxinformation.cbic.gov.in/view-pdf/1009820/ENG/Notifications
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