Responding to ITC Alerts: Rule 88D

1.

Pay an amount equal to the excess input tax credit availed in the said GSTR-3B, along with interest payable under Section 50, through DRC-03, or

2.

The registered person furnishes a reply with proper reasons through Part B of the DRC-01C within 7 days.

3.

If a registered person does not pay the amount specified in the intimation and does not furnish any explanation or reason,

4.

If the proper officer is not satisfied with the reply furnished by the taxpayer due to an explanation or reason not found acceptable, the said amount shall be liable to be demanded in accordance with the provisions of Sections 73 or 74, as the case may be.

1.

If taxpayers excess claim ITC, then they are likely to receive an intimation in Form DRC-01C under Rule 88D asking for an explanation of the reason for the excess ITC availed or payment of the amount of ITC that is availed in excess of the GST auto-populated in GSTR-2B along with appropriate interest.

2.

If you received an intimation First of all, we need to reconcile ITC for the particular month shown in the intimation and determine the reason for availing excess ITC as compared to GSTR2B.

3.

If there is any excess claim for ITC due to a mistake or an error on your part, Then we need to reverse the ITC with applicable interest, file DRC-03, and file a reply in Part B of DRC-01C by providing the ARN of DRC-03 for payment of tax and interest.

4.

If the ITC claimed is taken due to a valid reason, then file a response in Part B of DRC-01C giving the accurate reason for availing excess ITC. Select one of the mentioned reasons as provided in the response tab of Part B of DRC-01C.

5.

If the reason is found to be satisfactory, then you will not need to do anything else. However, if the reason stated by us is not found to be satisfactory, we have to pay the amount of excess ITC availed along with interest, and proceedings under 73 or 74 can be initiated.

1.

Input tax credit not claimed in previous tax period due to non-receipt of purchased goods or services in that tax period. It could also include cases of receipt of goods in the next few months.

2.

Input tax credit on import of goods that is not reflecting in GSTR-2B.

3.

ITC claimed inward supplies from SEZ, which do not appear in GSTR-2B.

4.

The taxpayer filed a GSTR-3B return with incorrect details and will amend the details in the subsequent tax period. The error in GSTR-3B could be due to typographical errors, charging the wrong tax rate, or any other reason, as the case may be.

5.

There can also be other reasons for a mismatch due to wrong or inaccurate filings by the supplier, such as the supplier furnishing incorrect figures (bookkeeping error or GST rate error) in his GSTR-1 and therefore reflected mistakenly in GSTR-2B, and as a result, there is a mismatch.

6.

The supplier has wrongly reflected the transaction(s). Instead of business-to-business (B2B), the transaction is reflected as business-to-customer (B2C), which accordingly does not reflect in GSTR-2B for the recipient, hence the mismatch.

7.

The supplier has filed quarterly GST instead of monthly, but the buyer claims ITC as per the received material and invoice.

8.

The supplier has not filed GSTR-1 before the due date and filed it after the due date. The ITC input is not shown in 2B in the particular month shown in the next month.