15 October 2017
Purchase from unregistered dealer above 5000 is to be shown in gstr2.as a result corresponding tax liability will be added.How to claim the said tax paid as ITC?Should we claim it in gstr2 or the credit will transfer to credit ledger automatically in the same month?
12 July 2024
In the GST regime, claiming Input Tax Credit (ITC) for purchases from unregistered dealers involves a specific process. Here’s how it generally works:
### Process for Claiming ITC on Purchases from Unregistered Dealers:
1. **Filing GSTR-2**: - GSTR-2 was initially intended to capture details of inward supplies (purchases) made by the registered taxpayer. However, GSTR-2 filing has been suspended by the GSTN (Goods and Services Tax Network), and now taxpayers do not need to file GSTR-2.
2. **Auto-Population to GSTR-2A**: - Instead of GSTR-2, the details of inward supplies reported by your suppliers (including purchases from unregistered dealers) are auto-populated into your GSTR-2A. GSTR-2A is a read-only document for recipients and serves as a reference for ITC claim.
3. **Claiming ITC in GSTR-3B**: - ITC is claimed by eligible taxpayers through GSTR-3B, which is a monthly summary return. In GSTR-3B, you can claim ITC on eligible purchases, including those from unregistered dealers, by filling in the relevant details in Table 4 of the return. - Ensure that the details in GSTR-3B match the amounts reflected in your GSTR-2A for the respective tax periods.
4. **Conditions for Claiming ITC**: - To claim ITC on purchases from unregistered dealers, the following conditions must be met: - The goods or services must have been received. - The tax invoice or debit note must have been issued and received. - The supplier must have deposited the tax collected from you to the government.
5. **Automatic Credit to Credit Ledger**: - Once you file GSTR-3B and claim the ITC, the eligible ITC amount will be credited to your electronic credit ledger automatically. This credit can be used to offset your GST liability on outward supplies (sales) or for other permissible purposes.
### Steps Summary: - Record purchases from unregistered dealers in your books of accounts. - Check GSTR-2A to ensure all purchases are correctly reflected. - Claim ITC for eligible purchases in GSTR-3B under Table 4. - Ensure compliance with GST rules regarding timing, documentation, and eligibility criteria for ITC.
### Important Considerations: - **Timely Filing**: File GSTR-3B within the due date to claim ITC for the respective tax period. - **Accuracy**: Ensure accuracy in reporting and matching of details between your purchase records, GSTR-2A, and GSTR-3B. - **Documentation**: Keep all invoices, debit notes, and relevant documents to support your ITC claims in case of any GST audit or scrutiny.
By following these steps and complying with GST regulations, you can effectively claim Input Tax Credit on purchases from unregistered dealers and utilize it to reduce your GST liability. If you have specific concerns or require further assistance, consulting with a GST professional or tax advisor would be beneficial.
CAclubindia
