n a recent update, the Goods and Services Tax Network (GSTN) has rolled out a significant change concerning the reversal of Input Tax Credit (ITC) for suppliers who fail to file GSTR 3B. The conversation between fictional characters, Arjuna and Krishna, sheds light on the press release and Rule 37(A) issued on November 14, 2023.
Clarification on ITC Reversal Requirement:
Arjuna seeks clarification from Krishna regarding the new requirement for taxpayers to reverse ITC due to defaults or non-compliance by their suppliers in filing GSTR 3B.
Press Release and Rule 37(A) Overview:
Krishna explains that the department issued a press release on November 14, 2023, emphasizing the need for taxpayers to reverse ITC claimed when their suppliers fail to file GSTR 3B, as outlined in Rule 37(A) of the CGST Act.
Breaking down the press release and Rule 37(A), Krishna simplifies the concept. Taxpayers who have claimed ITC for invoices and debit notes reported by their suppliers in GSTR 1/IFF returns face a reversal obligation if the suppliers haven’t filed their GSTR 3B returns for those transactions by September 30th, post the financial year when the credit was claimed. The reversal must be completed in the GSTR 3B return before November 30, 2023, ensuring compliance with the new mandate. Immediate attention and action are crucial for taxpayers to adhere to this regulatory change and avoid penalties.