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ITC query

ANJANI KUMAR (INTER+CPT) (115 Points)

05 June 2018

Purchase ordered on 31.03.18 ..on the same date entered in books of accounts..and filled GSTR3B by considering above purchase..

actual date of invoice is 01.04.2018

In April month tax has been paid by considering above...

what is the consequences for period difference ITC availed....

thanks in advance

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10 Replies

CA Padmasri Manyam (CA in Practice) (1340 Points)
Replied 05 June 2018

Department can demand interest on Input tax credit for the period of one month, for excess availment of credit.

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ANJANI KUMAR (INTER+CPT) (115 Points)
Replied 05 June 2018

whether interest @ 24% or 18 % ?

CA Padmasri Manyam (CA in Practice) (1340 Points)
Replied 05 June 2018

My view is 18% as per Section 50(1).

MURALI NADIMINTI (502 Points)
Replied 05 June 2018

mere passing the entries in the books of account, we can't avail credit, goods must actually received and services are actually availed.

department may ask us pay interest on excess availment.

Pankaj Rawat (GST Practitioner) (55052 Points)
Replied 05 June 2018

It will be 24% As it is wrongly avail ITC

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CA Padmasri Manyam (CA in Practice) (1340 Points)
Replied 05 June 2018

Interest rate @ 24% as per Section 50(3) should be applied in case of excess claim of ITC as a result of mismatch i.e. under Sectio 42, 43.

Currently, matching provisions are not applicable. Hence, i am of the view that the interest rate shall be applied at the rate of 18% as per Section 50(1).

Correct me if my understanding is not correct.

MURALI NADIMINTI (502 Points)
Replied 05 June 2018

presently no matching, department can issue notice difference 3B and 2A. now department is issuing notices to many companies towards excess input claims as per 3B and 2A difference. interest rate is @ 24% is correct

CA Padmasri Manyam (CA in Practice) (1340 Points)
Replied 05 June 2018

Just beacuse the department people has issued letter (2A vs 3B) indicating it is excess claim of ITC it will not actually become excess availement of ITC. Unless, the receiver taken ITC without any document, goods or services.

Merely due to the fault of the supplier, the recipient shall not be penalised.

Currently credit can be taken on provisional basis as per Section 41 of CGST Act. Once the matching provisions are implemented to say that the credit can be taken only after payment of tax by the supplier, then there is question of interest for excess availment of ITC.

Pankaj Rawat (GST Practitioner) (55052 Points)
Replied 05 June 2018

AS PER SECTION 50 (3) CGST ACT : "A TAXABLE PERSON WHO MAKES AN UNDUE OR EXCESS CLAIM OF INPUT TAX" : RATE OF INTEREST IS 24%, (IT DOES NOT MEAN THAT IF IT IS MISMATCH AS PER SEC-42, 43, CGST ACT ONLY, EVEN IF YOU HAVE CLAIM ITC UNDER SECTION 17(5) YOU ARE LIABLE DEPO INTT. @ 24%)

IF INPUT IS WRONGLY CLAIM : INTEREST RATE @ 24%

IF TAX IS PAID LATE OR FAIL TO TAX LIABLITIES ON TIME : INTEREST RATE @ 18%