GST Dept issues Section 150 ITC Mismatch Notices for GSTR-2B/GSTR-3B v/s GSTR-9 Discrepancies

The Goods and Services Tax ( GST ) Department has issued notices to several companies regarding discrepancies in Input Tax Credit ( ITC ) claims, leading to a thorough examination of annual returns in comparison to monthly filings. Section 150 of the Central Goods and Services Tax Act has been invoked, necessitating explanations for instances of “short reporting” of ITC.

However, businesses contend that some notices lack proper verification, resulting in an undue burden of compliance. Despite these concerns, officials assert that mismatches cannot be disregarded. Goods and services tax ( GST ) authorities have flagged companies for inconsistencies in their input tax credit ( ITC ) claims, following meticulous scrutiny of ITC availed and discrepancies in annual returns. Notices, as per Section 150 of the Central GST Act, 2017, have been dispatched, requiring taxpayers to submit an information return elucidating the reasons behind the “short reporting” of input tax credit. “Short reporting” occurs when the ITC claimed in the annual return ( GSTR-9 ) is less than that declared in the monthly forms ( GSTR-3B or GSTR-2B ).

GSTR-3B is a monthly self-declared summary of GST returns, while GSTR-2B is an auto-drafted form providing eligible and ineligible ITC for each month. The majority of these notices were sent in January for the April to November period of 2023-24. Critics argue that while the law permits officials to request information returns, many notices are dispatched mechanically, without verifying whether taxpayers have actually availed the ITC, thereby increasing the compliance burden. An industry expert pointed out that some notices mechanically instruct taxpayers to reverse unclaimed ITC in GSTR-3B without due consideration, questioning the logic of reversing unclaimed ITC. In a post-budget interview, Central Board of Indirect Taxes and Customs ( CBIC ) Chairman Sanjay Kumar Agarwal emphasized that the department cannot overlook an ITC mismatch when it appears in the system.

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