ITC 20% to be claimed for invoice not shown by supplier
This query is : Resolved
12 October 2019
Seetharaman Sir,
In Economic Times on 10th October, 2019, there was article that if one has to clain ITC, for invoice not shown by supplier in GSTR2A (if you can not see), then you can only claim 20% of ITC for that invoice which is not shown by supplier. They say that it is w.e.f. October 9, 2019. Is this true?
Thanks if you can guide me please.
In Economic Times on 10th October, 2019, there was article that if one has to clain ITC, for invoice not shown by supplier in GSTR2A (if you can not see), then you can only claim 20% of ITC for that invoice which is not shown by supplier. They say that it is w.e.f. October 9, 2019. Is this true?
Thanks if you can guide me please.
13 October 2019
It is true , but its not that you can claim 20 % ITC for that invoice not uploaded by supplier . It is 20% of the total ITC which have been uploaded by your suppliers .
For example - Your vendor has not uploaded invoice amounting to rs 100000 and GST Rate is 18% .. Your other suppliers have uploaded invoices amounting to Rs 2,00,000/- and rate is 18% .
You can claim normal credit of 36000( 18% of 200000) and provisional credit of 20 % of 36000 = 7200/- ( Total 36000+7200= 43200)
In normal case , you could have availed 36000+18000= 54000
Notification No. 49/2019 – Central Tax Dated: 9th October, 2019
https://taxguru.in/goods-and-service-tax/restriction-itc-case-diffrence-gtr-3b-return-cbic-notifies.html
For example - Your vendor has not uploaded invoice amounting to rs 100000 and GST Rate is 18% .. Your other suppliers have uploaded invoices amounting to Rs 2,00,000/- and rate is 18% .
You can claim normal credit of 36000( 18% of 200000) and provisional credit of 20 % of 36000 = 7200/- ( Total 36000+7200= 43200)
In normal case , you could have availed 36000+18000= 54000
Notification No. 49/2019 – Central Tax Dated: 9th October, 2019
https://taxguru.in/goods-and-service-tax/restriction-itc-case-diffrence-gtr-3b-return-cbic-notifies.html
13 October 2019
Anita Madam,
Thanks for your reponse.
I have some queries. I will appreciate if you can guide me please.
I refer to your notification number 49/2019: Input tax credit to be availed by a registered person in respect of invoices or debit notes, the details of which have not been uploaded by the suppliers under sub-section (1) of section 37, shall not exceed 20 per cent. of the eligible credit available in respect of invoices or debit notes the details of which have been uploaded by the suppliers under sub-section (1) of section 37.”.
In common man's language what I have understood is as follows:
1) W.E.F. July 1, 2017, those suppliers who have not filed invoices in GST return, though it is given to the buyer, the buyers can claim only 20% of ITC for any supplies from these suppliers from Sept. 2019 GSTR3B returns onwards for which he has submitted the invoices. Is the understanding correct?
2) Question is suppose, the supplier does not file old invoices of FY 2017-18 (due to whatever reasons), then for how many months the buyer has to keep taking 20% of the invoice value for supplies from these suppliers.(20% for 5 months to claim full ITC from these suppliers? ). - Please guide.
3) Why Buyer has to suffer (though he is having proper GST Invoice from the suppliers), because supplier has not filed the return for these invoices. Why Govt. can not penalise suppliers for their non-submission of invoices?
PLEASE LET ME KNOW WHETHER THIS INTERPRETATION IS CORRECT.
I give below some examples for further important clarifications:
Suppose I have suppliers A, B, C,D, E
Supplier A - has not filed 2 out of 10 invoices in the month of July 2018 and 1 out of 5 invoice for August 2019. He has filed all other invoices till now.
As a buyer, when I file my Sept. GSTR3B, will I be allowed to take 20% of ITC of 4 invoices of August 2019 from supplier A - Please clarify. Should I claim 20% each month from Sept. onwards till I recover full ITC, though it is delayed ITC credit to me?
Supplier B - has not filed 1 invoice in May 2019 as per GSTR2A, but he says he had given to CA for filing who has made some punching error. As a buyer, I have claimed ITC in my May GSTR3B return. Supplier does not know how to correct it and where it will be reflected after correction? - Will it appear in GSTR2A of May 2019 or month of correction, say October 2019.
Supplier C, D, E - are also suppliers with turnover less than Rs. 1.5 Cr. So they file quarterly GSTR1 return, so they will file July-Sept 2019 return by 31st Oct. So in GSTR2A, it will get reflected in November. So, I am unable to claim ITC for supplies from these suppliers and hence my cash outflow will increase a lot. - Please explain whether understanding is correct.
If yes, larger question is as to how small businesses can survive in such environment? Why there is no representation to the Govt. from big institutions like yours.
Regards,
Thanks for your reponse.
I have some queries. I will appreciate if you can guide me please.
I refer to your notification number 49/2019: Input tax credit to be availed by a registered person in respect of invoices or debit notes, the details of which have not been uploaded by the suppliers under sub-section (1) of section 37, shall not exceed 20 per cent. of the eligible credit available in respect of invoices or debit notes the details of which have been uploaded by the suppliers under sub-section (1) of section 37.”.
In common man's language what I have understood is as follows:
1) W.E.F. July 1, 2017, those suppliers who have not filed invoices in GST return, though it is given to the buyer, the buyers can claim only 20% of ITC for any supplies from these suppliers from Sept. 2019 GSTR3B returns onwards for which he has submitted the invoices. Is the understanding correct?
2) Question is suppose, the supplier does not file old invoices of FY 2017-18 (due to whatever reasons), then for how many months the buyer has to keep taking 20% of the invoice value for supplies from these suppliers.(20% for 5 months to claim full ITC from these suppliers? ). - Please guide.
3) Why Buyer has to suffer (though he is having proper GST Invoice from the suppliers), because supplier has not filed the return for these invoices. Why Govt. can not penalise suppliers for their non-submission of invoices?
PLEASE LET ME KNOW WHETHER THIS INTERPRETATION IS CORRECT.
I give below some examples for further important clarifications:
Suppose I have suppliers A, B, C,D, E
Supplier A - has not filed 2 out of 10 invoices in the month of July 2018 and 1 out of 5 invoice for August 2019. He has filed all other invoices till now.
As a buyer, when I file my Sept. GSTR3B, will I be allowed to take 20% of ITC of 4 invoices of August 2019 from supplier A - Please clarify. Should I claim 20% each month from Sept. onwards till I recover full ITC, though it is delayed ITC credit to me?
Supplier B - has not filed 1 invoice in May 2019 as per GSTR2A, but he says he had given to CA for filing who has made some punching error. As a buyer, I have claimed ITC in my May GSTR3B return. Supplier does not know how to correct it and where it will be reflected after correction? - Will it appear in GSTR2A of May 2019 or month of correction, say October 2019.
Supplier C, D, E - are also suppliers with turnover less than Rs. 1.5 Cr. So they file quarterly GSTR1 return, so they will file July-Sept 2019 return by 31st Oct. So in GSTR2A, it will get reflected in November. So, I am unable to claim ITC for supplies from these suppliers and hence my cash outflow will increase a lot. - Please explain whether understanding is correct.
If yes, larger question is as to how small businesses can survive in such environment? Why there is no representation to the Govt. from big institutions like yours.
Regards,
14 October 2019
I will explain with the following example
Situation 1 Situation 2
1.GST ITC claimed 1000 1000
2.GST ITC reflected in 2A 800 950
3.GST ITC not reflected in 2A 200 50
4.20% Eligible on reflected in 2A 160 190
( 20% on serial no 2)
5. Ineligible and will be reduced in ITC 40 0
( Serail no 3 - 4)
I will explain with the following example
Situation 1 Situation 2
1.GST ITC claimed 1000 1000
2.GST ITC reflected in 2A 800 950
3.GST ITC not reflected in 2A 200 50
4.20% Eligible on reflected in 2A 160 190
( 20% on serial no 2)
5. Ineligible and will be reduced in ITC 40 0
( Serail no 3 - 4)
14 October 2019
1. Notification applicable w.e.f 01 Oct 2019 ( not w.e.f 01 July 2017).
2. No, it's not that supplies from THOSE SUPPLIERS who had not filed a return / uploaded bills – your provisional ITC restricted to 20 % of eligible credit. It means ITC on bills not uploaded will be restricted to 20 % of all the eligible ITC on invoiced uploaded by all the suppliers
3. I agree with you. Govt should not penalize buyers
4. In your example above
You have 5 suppliers and one of the suppliers not filed his return
You will get eligible ITC in respect of 4 suppliers and in respect of 5th supplier, you can claim provisional ITC 20% of your total eligible ITC ( arrived out of returns filed by your 4 suppliers )
2. No, it's not that supplies from THOSE SUPPLIERS who had not filed a return / uploaded bills – your provisional ITC restricted to 20 % of eligible credit. It means ITC on bills not uploaded will be restricted to 20 % of all the eligible ITC on invoiced uploaded by all the suppliers
3. I agree with you. Govt should not penalize buyers
4. In your example above
You have 5 suppliers and one of the suppliers not filed his return
You will get eligible ITC in respect of 4 suppliers and in respect of 5th supplier, you can claim provisional ITC 20% of your total eligible ITC ( arrived out of returns filed by your 4 suppliers )
14 October 2019
Mr. Sundarajan is right.
Total ITC available in situation 1 is 800+ 20% of 800 = 960
and in situation B :- 950 + 20% of 950 - ( Rs 1000/- as ITC can not exceed from the amount claimed )
Total ITC available in situation 1 is 800+ 20% of 800 = 960
and in situation B :- 950 + 20% of 950 - ( Rs 1000/- as ITC can not exceed from the amount claimed )
14 October 2019
Thanks Ms Anita and Mr. Sunderrajan. That means it is not related to supplierwise. it is overall ITC claim.
This is w.e.f. 1st oct. 2019, so when I file GSTR3B for srpt. now, should I follow new rule for ITC or old rule?
This is w.e.f. 1st oct. 2019, so when I file GSTR3B for srpt. now, should I follow new rule for ITC or old rule?
14 October 2019
Also I have another query. Me and my suppliers are having turnover below 1.5 Cr. so they are filing quarterly GSTr1 return.However we file GSTR3B on monthly basis. Now they will file GSTR1 in January 31, 2020, so for Oct-Dec quarter actual GSTR2A reflection will be in February 2020. So till that time, my claim for ITC will be almost NIL. How can anyone work like this? Cashflow is blocked. Can you tell me, why people are not bringing this to Govt. notice?
14 October 2019
To my understanding , now the GST credit is flow from the list uploaded by us . But as per new notification as per list uploaded or the credit in GSTR 2 a + 20% of GSTR 2A which ever is low.
I also agree that if the above is implemented that GSTR Input credit from the supplier who are filing quarterly return will not come and cash flow will be affected.
But department is to clarify mode of implementation and solution for mismatch of monthly return and quarterly return
I also agree that if the above is implemented that GSTR Input credit from the supplier who are filing quarterly return will not come and cash flow will be affected.
But department is to clarify mode of implementation and solution for mismatch of monthly return and quarterly return
15 October 2019
Thanks Mr. Sundararajan and Ms Anita.
What I observe in GSTR2A, that it shows Invoices submitted and also shows Invoices Not Submitted. What is the meaning of Invoices not submitted. (If it is not filed by supplier, how can portal have those details?)
Assuming we have to only consider GSTR2A submitted Invoices as the ones which are filed and NOT submitted as the non-filed invoices. But I have list of invoices from my suppliers, which is not appearing in GSTR2A (neither submitted nor non-submitted).
So how to calculate the claim of ITC?
Is it 120% of credit in GSTr2A for submitted invoices or ITC of non-submitted Invoices as per GSTR2A list, whichever is lower OR
It is 120% of credit in GSTr2A for submitted Invoices or ITC of non-submitted Invoices as per list of invoices available with me (not still appearing in GSTR2A list), whichever is lower.
If my understanding is flawed, please excuse me and guide me.
Regards,
What I observe in GSTR2A, that it shows Invoices submitted and also shows Invoices Not Submitted. What is the meaning of Invoices not submitted. (If it is not filed by supplier, how can portal have those details?)
Assuming we have to only consider GSTR2A submitted Invoices as the ones which are filed and NOT submitted as the non-filed invoices. But I have list of invoices from my suppliers, which is not appearing in GSTR2A (neither submitted nor non-submitted).
So how to calculate the claim of ITC?
Is it 120% of credit in GSTr2A for submitted invoices or ITC of non-submitted Invoices as per GSTR2A list, whichever is lower OR
It is 120% of credit in GSTr2A for submitted Invoices or ITC of non-submitted Invoices as per list of invoices available with me (not still appearing in GSTR2A list), whichever is lower.
If my understanding is flawed, please excuse me and guide me.
Regards,
16 October 2019
If your purchase invoices are not reflected in GSTR 2A , it means that the supplier has not filled GSTR1 or your GST RC was wrongly mentioned . Then you have to compare your list of supplier wise purchase with supplier wise purchase reflected in GSTR 2A and for the mismatch, you have to follow the concerned suppliers to file their GSTR 1.
You are eligible to take maximum of GST ITC as per GSTR 2 A + 20% OF GST 2A as per notification no 049. As informed ealier, we have to see how the government implement the same in due course.
You are eligible to take maximum of GST ITC as per GSTR 2 A + 20% OF GST 2A as per notification no 049. As informed ealier, we have to see how the government implement the same in due course.
29 October 2019
I have a query regarding AOC4 and MGT7 filing. Clerk has kept some columns unfilled and column of revenue split with different HSN codes is not shown separately. He has shown 100% revenue in wrong HSN code. Financial statement attached is correct and there is no change.Without checking, he has submitted the form to MCA.
Can anyone guide me, as to how MCA will treat this? Will they declare it as faulty and ask us to fill afresh? Will there be any penalty? If yes of how much?
Can anyone guide me, as to how MCA will treat this? Will they declare it as faulty and ask us to fill afresh? Will there be any penalty? If yes of how much?
02 August 2024
If the form **AOC-4** (for financial statements) and **MGT-7** (for annual return) have been filed with incorrect information, such as incorrect HSN codes or incomplete columns, here is how the Ministry of Corporate Affairs (MCA) will likely treat the situation and the steps you should take:
### Treatment by MCA
1. **Review and Rejection:**
- **Review Process:** The MCA may review the submitted forms. If they identify discrepancies or incomplete information, such as incorrect HSN codes or missing details, they may reject the forms.
- **Defective Forms:** If the forms are found to be defective or non-compliant with the required standards, the MCA may issue a notice asking for a resubmission with corrected details.
2. **Penalties:**
- **Late Filing Penalty:** If the forms are rejected and not refiled on time, the company may face late filing penalties. The penalty amounts vary depending on the delay and the type of form. For annual filings, the penalty can range from ₹100 to ₹1,000 per day of delay.
- **Additional Fees:** If the incorrect filings lead to non-compliance issues or additional scrutiny, there may be additional fees or penalties imposed for rectifying the errors.
### Steps to Take
1. **Rectification Process:**
- **Correct the Errors:** Prepare corrected versions of the forms AOC-4 and MGT-7. Ensure that all the information, including the correct HSN codes and any missing details, is accurately filled.
- **File the Corrected Forms:** You will need to re-submit the corrected forms through the MCA21 portal. If the forms are accepted, the previous incorrect filings will be replaced.
2. **Resubmission Procedure:**
- **Refile Forms:** Log into the MCA21 portal, navigate to the forms section, and re-file the corrected AOC-4 and MGT-7 forms. Make sure to attach the correct financial statements and any other required documents.
- **File an Addendum (if needed):** For some specific cases, an addendum or a rectification form may be required to correct the previously filed documents.
3. **Communication with MCA:**
- **Contact MCA Helpdesk:** If you are unsure of the process or need guidance, contact the MCA helpdesk for assistance. They can provide specific instructions based on the nature of the errors.
- **Seek Professional Advice:** Consulting with a company secretary or a legal advisor specializing in corporate compliance can provide additional support and ensure that all necessary actions are taken.
4. **Documentation:**
- **Maintain Records:** Keep a record of all communications, submissions, and responses related to the filing and rectification process. This documentation will be useful in case of any disputes or additional queries from the MCA.
### Key Points to Remember
- **Timeliness:** Address the errors and refile as soon as possible to minimize any penalties and ensure compliance.
- **Accuracy:** Ensure all information provided in the forms is accurate and matches the financial statements to avoid future issues.
- **Professional Assistance:** Engage with a professional to assist with the correction and re-filing process, if needed.
By taking prompt action and ensuring accurate resubmission, you can mitigate potential penalties and address the errors in the filings effectively.
### Treatment by MCA
1. **Review and Rejection:**
- **Review Process:** The MCA may review the submitted forms. If they identify discrepancies or incomplete information, such as incorrect HSN codes or missing details, they may reject the forms.
- **Defective Forms:** If the forms are found to be defective or non-compliant with the required standards, the MCA may issue a notice asking for a resubmission with corrected details.
2. **Penalties:**
- **Late Filing Penalty:** If the forms are rejected and not refiled on time, the company may face late filing penalties. The penalty amounts vary depending on the delay and the type of form. For annual filings, the penalty can range from ₹100 to ₹1,000 per day of delay.
- **Additional Fees:** If the incorrect filings lead to non-compliance issues or additional scrutiny, there may be additional fees or penalties imposed for rectifying the errors.
### Steps to Take
1. **Rectification Process:**
- **Correct the Errors:** Prepare corrected versions of the forms AOC-4 and MGT-7. Ensure that all the information, including the correct HSN codes and any missing details, is accurately filled.
- **File the Corrected Forms:** You will need to re-submit the corrected forms through the MCA21 portal. If the forms are accepted, the previous incorrect filings will be replaced.
2. **Resubmission Procedure:**
- **Refile Forms:** Log into the MCA21 portal, navigate to the forms section, and re-file the corrected AOC-4 and MGT-7 forms. Make sure to attach the correct financial statements and any other required documents.
- **File an Addendum (if needed):** For some specific cases, an addendum or a rectification form may be required to correct the previously filed documents.
3. **Communication with MCA:**
- **Contact MCA Helpdesk:** If you are unsure of the process or need guidance, contact the MCA helpdesk for assistance. They can provide specific instructions based on the nature of the errors.
- **Seek Professional Advice:** Consulting with a company secretary or a legal advisor specializing in corporate compliance can provide additional support and ensure that all necessary actions are taken.
4. **Documentation:**
- **Maintain Records:** Keep a record of all communications, submissions, and responses related to the filing and rectification process. This documentation will be useful in case of any disputes or additional queries from the MCA.
### Key Points to Remember
- **Timeliness:** Address the errors and refile as soon as possible to minimize any penalties and ensure compliance.
- **Accuracy:** Ensure all information provided in the forms is accurate and matches the financial statements to avoid future issues.
- **Professional Assistance:** Engage with a professional to assist with the correction and re-filing process, if needed.
By taking prompt action and ensuring accurate resubmission, you can mitigate potential penalties and address the errors in the filings effectively.
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