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May 26, 2020

Can you take Input Tax Credit (ITC) of GST, even if the ITC is not reflected in GSTR2A?

by Rubina Dsouza in GST, GST Circular Notification

Can you take Input Tax Credit (ITC) of GST, even if the ITC is not reflected in GSTR2A?

What is Input Tax?

Input Tax” in relation to a taxable person, means the GST charged on him for any supply of goods and/or services to him, which are used or are intended to be used, for the furtherance of his business.

In simple words, ITC means at the time of paying tax on output, you can reduce the tax you have already paid on inputs and pay the balance amount.

Who can Claim ITC?

A registered person under GST can Claim ITC on fulfilment of the following conditions:-

  1. Possession of tax invoice or debit note or document evidencing payment
  2. Receipt of goods and/or services
  3. Returns have been furnished
  4. Goods delivered by supplier to other person on the direction of a registered person should be against a document of transfer of title of goods
  5. When goods are received in installments, ITC can be claimed only when the last lot or installment is received
  6. Failure of the supplier towards supply of goods/services within 180 days from the date of invoice, ITC already claimed by recipient will be added to output tax liability and interest to paid on such tax involved. On payment to supplier, ITC will be again allowed to be claimed
  7. No ITC will be allowed if depreciation has been claimed on tax component of capital goods
  8. Time limit to claim ITC against an Invoice or Debit Note, is earlier of below dates:

a. Due date of filing of GST Return for September of the next Financial Year

Or b. Date of filing of Annual Returns of the relevant Financial Year

9. Common credit of ITC used commonly for:

a. Effecting exempt and taxable supplies

b. Business and non-business activity

10. The CBIC released an important notification on 9 October 2019, inserting a new sub-rule (4) under rule 36 of the CGST Rules, 2017. The rule states that the provisional tax credit (without invoices on GSTR-2A) can be claimed in the GSTR3B only to the extent of 10%* of eligible ITC reflected in the GSTR2A

Hence, the total ITC that can be claimed in GSTR-3B is 110% of the eligible ITC appearing in the GSTR-2A of a particular period.

*With effect from 1 Jan 2020; was earlier restricted to 20% for the period from 9 Oct 2019 to 31 Dec 2019

Can ITC be claimed if the same is not reflected in GSTR 2A?

Let us understand the question with the help of an example.

For Instance, A sells goods to B. B will pay invoice amount + GST to A. A is liable to pay the GST to the Government.

B now uses the raw materials purchased by A to produce finished goods. B sells the finished goods and collects GST on the same.

B has to ideally pay the GST collected from the sale of his finished goods reduced by the ITC to the government

GSTR1  is the return to be furnished by A for reporting details of all outward supplies of goods and services made, or in other words, sales transactions made during a tax period.

GSTR2A is the return containing details of all inward supplies of goods and services i.e. purchases made from registered suppliers during a tax period.

The issue in hand is whether B can claim ITC, if the same is not reflected in GSTR 2A?


As we know, GSTR-2A gets auto-populated based on the detailed filed in GSTR1 from suppliers end even after passing of due date. Hence, a mismatch between invoices and updated GSTR 2A is common, making reconciliation challenging for taxpayers.

The taxpayers with annual turnover less than Rs 1.5 crores file quarterly returns as per GST rules. However, with Monthly ITC claiming via GSTR 3B, it is nearly impossible for anyone to reconcile monthly invoices with GSTR2A (as it would be generated after the given quarter).

Discrepancies may also arise if the supplier has failed to pay the GST to the government and has not mentioned the supply in GSTR 1.

Although the recipient can claim provisional tax credit to the extent of 10% of the eligible ITC reflected in GSTR 2A, such provision will not be applicable if GST is not paid to the government at all by the supplier. Payment of tax to the government by the supplier is a prerequisite while claiming ITC by the recipient.

Provision of Law

According to Section 16, no registered taxable person shall be entitled to the credit of any input tax in respect of any supply of goods and/or services to him unless the tax charged in respect of such supply has been actually paid to the account of the appropriate Government, either in cash or through utilization of input tax credit admissible in respect of the said supply.

Procedures to be followed by the recipient in such cases:-

  1. Follow up with the supplier, reminding them to pay the GST and file the proper return within respective due dates so that you can claim your rightful ITC.
  2. If the reason of non-filing of return is due to the fact that the supplier has opted to file quarterly returns, then there might be a time lag if up to 3 months or a little more between the invoice and its appearance in GSTR 2A.
  3. The recipient will have to keep track of the same. If the supplier has not paid the tax, the credit will have to be reversed.

After considering the situations mentioned above, if any discrepancies are found in Form GSTR – 2A and GSTR -3B leading to any excess ITC claimed by the recipient, the same must be paid by the taxpayer along with interest.

At the same time it is to be noted that Input Tax credit (GST) Cannot be denied to recipient for default on part of the supplier- held by the Delhi High Court in the case of Bharti Telemedia Ltd. Vs. Union Of India & Ors. Further, it is the responsibility of the purchaser to file his timely returns within due dates and also maintain all the invoices, records and data of the rightful ITC claim in case required by the Department. As the liability to prove the claim of ITC is on the purchaser making such claim subject to the query if any raised by the department.

It is, therefore, necessary that reconciliation is done on a regular basis to ensure that only bonafide input tax credit is claimed.

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