I had filed TRAN I in Nov 17 - Dec 17 & availed credit of Rs.4,00,000 to SGST A/c. Now during VAT Audit Credit have reduced to Rs.3,75,000 due to additional Sales Invoice in VAT period. That means I have claimed excess Rs.25,000 in TRAN I.
In this situation how to do I rectify this mistake?
- By paying Extra 25,000/- under VAT along with applicable interest - By reversing Rs.25,000/- from SGST Credit Balance under GST along with applicable interest - Any Other means
07 July 2024
In the situation where you have claimed excess input tax credit (ITC) of Rs.25,000 under SGST due to discrepancies found during VAT audit, here’s how you can rectify this mistake:
1. **Reversal of Excess ITC in GST:** - You can reverse the excess ITC of Rs.25,000 from your SGST credit balance under GST. This involves adjusting your SGST liability in the subsequent GST returns.
2. **Process:** - Calculate the exact amount to be reversed (Rs.25,000) and the applicable interest, if any, for the period during which the excess credit was claimed. - Prepare a reversal entry in your GST returns to reduce the SGST credit balance by Rs.25,000. This adjustment should be reflected in the appropriate tables (e.g., Table 4 of GSTR-3B for SGST).
3. **Documentation:** - Maintain documentation of the reversal entry and the reasons for it. This should include details from your VAT audit report or findings that led to the adjustment.
4. **Payment under VAT:** - Simultaneously, you should pay the Rs.25,000 (along with applicable interest) under VAT. This ensures compliance with VAT regulations and rectifies the discrepancy noted during the audit.
5. **Consultation:** - It’s advisable to consult with a GST expert or a chartered accountant to ensure compliance with both GST and VAT requirements. They can assist in accurately calculating the interest and guiding you through the reconciliation process.
By reversing the excess ITC in GST and paying the corresponding amount under VAT, you align your records with the correct tax liabilities and maintain compliance with both GST and VAT regulations. Remember to keep all documentation and communication related to this rectification process for future reference and audits.
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