Dear All,

As we are approaching the closure of the books of accounts for the Financial Year (‘FY’) 2021-22, it becomes imperative for the businesses to review any adjustments required from GST Law perspective viz. Input Tax Credit (‘ITC’) claims, issuance of credit notes, etc. For such adjustments, the prescribed timeline as per GST Law is upto the due date for furnishing the return for the month of September following the end of relevant financial year (i.e., due date for the September 2022 return) or furnishing of relevant annual return.

In this regard, we have enumerated hereinbelow key points from GST Law perspective which should be looked into before filing the GST returns for the month of September 2022:

Points related to Input Tax Credit

• Avail any unclaimed ITC pertaining to FY 2021-22: Eligible ITC for FY 2021-22 can be claimed upto the due date of filing of return for the month of September 2022. Thus, the businesses should ensure that all eligible ITC of FY 2021-22 which were not claimed earlier for any reason whatsoever like improper tax invoice, absence of GSTIN of the supplier on the tax invoice, non-availability of invoice in Form GSTR-2B, etc. should be claimed on or before the due date of filing of return for the month of September 2022. Beyond the prescribed timeline, the eligible ITC shall lapse statutorily and this in turn would become cost in the hands of businesses. (Section 16 of the CGST Act)
• Reversal of ITC: Every taxpayer having both taxable and exempt supplies is required to reverse ITC pertaining to exempt supplies on a provisional basis for each month. Such taxpayers need to do a final calculation of amount to be reversed for the entire financial year and, accordingly, tax paid/recovered is required to be adjusted before the due date for furnishing the return for the month of September 2022. It is to be noted that delay in reversal of ITC may trigger interest liability. (Rule 42 of the CGST Rules)
• Review of reversal of ITC claimed if payment to vendor is not made within 180 days (to be reclaimed after payment): Businesses are required to reverse ITC claimed along with applicable interest if the payment to vendors is not made within 180 days from the date of invoice. Further, such ITC can be re-claimed once payment is made to the vendor. Accordingly, the businesses should review if such reversals and re-claim of ITC is done appropriately. (Section 16 of the CGST Act)
• Identify mismatch of ITC: Businesses should identify any mismatch between the ITC claimed for FY 2021-22 in Form GSTR 3B vis-à-vis the GST liability declared by the vendors (as reflected in Form GSTR-2B). Further, businesses should take corrective measures in order to reconcile these differences.

Other Points

• Adjustment through credit note: Credit notes for any supply made in FY 2021-22 are required to be issued and disclosed in the return for the month of September 2022. Accordingly, businesses should ensure that all adjustments of credit notes for any supply pertaining to FY 2021-22 should be made on or before 30 September 2022 and disclosed in the return for the month of September 2022. (Section 34 of the CGST Act)
• Rectification of error or omission in outward supply return: Businesses should ensure that any error or omission in respect of the outward supply details furnished in the Form GSTR-1, for FY 2021-22 should be rectified not later than the due date for filing of the return for the month of September 2022. (Section 37 of the CGST Act)

 Note: Under the Finance Act, 2022, the timeline for availing ITC and other adjustments as mentioned above has been changed as upto 30 November 2022. However, such changes are still not notified. Therefore, the timeline as prescribed above i.e., due date of filing return for the month of September 2022 would apply until such changes are notified in the official gazette.