How will GSTR 2A Additional Fields Affect Taxpayers for Credit Availability?
Countries implementing value-added tax with credit mechanisms are grappling with the global menace of input tax credit frauds. In an attempt to curb this menace, the GST law introduced various anti-abuse provisions, which included matching the GST credit taken by a taxpayer with the GST paid by its supplier over the GSTN.
Introducing changes in GSTR 2A
Recently, the GST authorities have added more fields in the existing GSTR 2A reports, thereby enabling the taxpayers to see the date of filing of GSTR 1 by the vendors and the status of filing of GSTR 3B (return through which GST payment is made) as ‘Y’ (Yes) or ‘N’ (No) and whether the (vendor’s) registration is valid or otherwise.
This information was available earlier and could be accessed by punching the individual’s GSTIN to check the GSTR 3B filing status. However, it was practically impossible to track for each supplier’s GSTIN. Now, this has been made available in the GSTR 2A report including past data from 2017.
For the safeguard of credit, the taxpayer verifies the GSTR 3B status with GSTR 1 agreement is an example to determine the suppliers for taking effective actions for any expected losses.
The GSTR 2A Change has the following Implications:
1. Tax authorities may now seek to deny input credit wherever GSTR 3B filing status is ‘N’ even if the credit is matched with the GSTR 2A report otherwise. There can be another wave of blocking of the input tax credit in the electronic credit ledger for such cases.
2. Major taxpayers had introduced ‘payment block,’ wherever there was a mismatch in GST credit reconciliation. Now the accounts payable process/system will have to be changed to add one more check of GSTR 3B filing status to ensure they do not get cash out due to default in GSTR 3B filing by suppliers. In all such cases, follow up will have to be done for this compliance as well.
3. A re-run of reunion will have to be undertaken for the past period right from July 2017 to date to check GSTR 3B filing status wherever input tax credit has been taken, and payments were released considering successful reconciliation with the GSTR 2A report earlier. A fresh follow up may have to be undertaken with the suppliers for the aforesaid transactions.
4. For the future, the following positions can be adopted for taking input credit:
a) Supplier invoices relating to prior months on which input tax credit is unclaimed, input tax credit be claimed in the current month only if GSTR 3B status is appearing as ‘Y’ against those invoices;
b) Supplier invoices raised in the current month, the input tax credit can be claimed provisionally in the current month;
c) Invoices on which input tax credit has already been claimed provisionally in the prior month if the GSTR 3B status appears as ‘N,’ the input tax credit for such invoices to be reversed in the ongoing month;
d) Invoices on which input tax credit has been reversed on account of GSTR 3B status as ‘N’ in earlier months, the input tax credit to be claimed if the status thereby has changed to ‘Y.’
Conclusion
The implications of GSTR 2A additional fields can be seen in above steps which will critically lead to another set of agreements and maintaining the transactions requires efforts for the businesses. The load for work is increased for the Account payable (AP) for the one who sees the discharge of payments towards the invoices of vendors and will need to react according to it while the vendor makes default in the acceptance of his GSTR 3B. Legal way LLP is a leading firm providing various tax and financial solutions to reputable businesses. Connect with us for more details and accounting.
