Introduction

The Goods and Services Tax (GST) regime, now in its seventh year, has undergone various evolutions. Despite its extended tenure, practical challenges like the ITC mismatch persist, affecting both professionals and the business community. Let's delve deeper into this pressing issue.

ITC MISMATCH ARISING DUE TO PRACTICAL ISSUES:

GST has successfully completed six years, with its seventh year underway. The 51st GST Council meeting was held to discuss changes in the GST mechanism. Numerous amendments have been made to ease the process of doing business.

My question is: Why aren't the GST council members addressing the practical issues of ITC mismatch, which are being faced by the assessees and working professionals?

It has been observed recently that the GST Department is issuing notices to assessees seeking clarification on the ITC mismatch. I wish to elucidate on this topic to the best of my understanding.

CLARIFICATION ON ITC MISMATCH:

When a trader/manufacturer buys goods/services from another trader/manufacturer, they pay the applicable GST. While discharging GST liabilities, the buyer claims the ITC that was paid earlier on GST invoices. Now, the issue arises when the supplier fails to file GSTR-1 by the 11th of the subsequent month, causing the ITC to not be reflected in GSTR-2B.

In today's scenario, from the GST Department's perspective, ITC is validated as per GSTR-2B. When the supplier files GSTR-1 on or before the due date, the ITC reflects in both 2A and 2B. However, if GSTR-1 is filed after the due date, the ITC appears only in 2A. So who is at fault? While the supplier is negligent in timely GST compliance, the repercussions fall on the buyer.

In my opinion, if you possess a GST invoice and it reflects in 2A, assessees should confidently claim ITC for the transaction month.

Urgent Amendments Needed

The GST Department imposes late fees and interest on tax if GSTR-3B is filed after the due date. In this scenario, the Department seems indifferent to the plight of buyers. Buyers can only reconcile the ITC when it auto-populates in 2A or 2B, which becomes available after the 14th of the subsequent month. Considering the GSTR-3B filing deadline is the 20th of the subsequent month, buyers only have a narrow window of 6 days to reconcile ITC with their purchase register.

If the Department started imposing late fees on GSTR-1, suppliers would be more diligent about filing their GSTR-1 on time. This change could resolve the ITC mismatch issue. It's baffling why the Department isn't acknowledging this practical issue.

The Department places an undue burden on the buyer. Not only does the buyer pay GST when purchasing goods, but they also have to coordinate with suppliers when discharging GST liabilities.

It is indeed absurd that the bulk of responsibilities rests on the buyer's shoulders. The Minister of Finance should urgently intervene and make necessary amendments to provide relief to buyers.

At the inception of GST in India, it was touted as a system with fewer burdens and compliances. Yet, it seems the compliance has reduced, but the onus has increased, predominantly on the buyer. Should the buyer engage in business or remain mired in ITC reconciliation? Businesses play a pivotal role in nation-building, yet it feels like the nation isn't considering their challenges.

Conclusion

As the GST landscape continues to evolve, it is imperative to address core issues like the ITC mismatch. While the GST regime aspires to simplify tax structures, the practical experiences of businesses, especially buyers, remain convoluted. A shift in accountability and a few targeted amendments could herald a more effective and efficient GST system.