Section 42 of GST – Matching, reversal and reclaim of input tax credit

Section 42 of GST – Matching, reversal and reclaim of input tax credit. All Details for GST Section 42, In this section you may find all details for Matching, reversal and reclaim of input tax credit. Detailed Analysis of GST Section 42 of GST Act 2017 – Matching, reversal and reclaim of input tax credit. Everything you want to know about GST all Sections. Section Wise Analysis of GST Act 2017, Chapter Wise Analysis of GST All Sections. in this article you may find complete details regarding Section 42 of GST Act 2017 – Matching, reversal and reclaim of input tax credit, gst all sections and definitionsNow Check more details from below…..

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Section 42 of GST – Matching, reversal and reclaim of input tax credit

(1) The details of every inward supply furnished by a registered person (hereafter in this section referred to as the “recipient”) for a tax period shall, in such manner and within such time as may be prescribed, be matched-

  • (a) with the corresponding details of outward supply furnished by the corresponding registered person (hereafter in this section referred to as the “supplier”) in his valid return for the same tax period or any preceding tax period,
  • (b) with the integrated goods and services tax paid under section 3 of the Customs Tariff Act, 1975 in respect of goods imported by him, and
  • (c) for duplication of claims of input tax credit.

(2) The claim of input tax credit in respect of invoices or debit notes relating to inward supply that match with the details of corresponding outward supply or with the integrated goods and services tax paid under section 3 of the Customs Tariff Act, 1975 in respect of goods imported by him shall be finally accepted and such acceptance shall be communicated, in such manner as may be prescribed, to the recipient.

(3) Where the input tax credit claimed by a recipient in respect of an inward supply is in excess of the tax declared by the supplier for the same supply or the outward supply is not declared by the supplier in his valid returns, the discrepancy shall be communicated to both such persons in such manner as may be prescribed.

(4) The duplication of claims of input tax credit shall be communicated to the recipient in such manner as may be prescribed.

(5) The amount in respect of which any discrepancy is communicated under subsection (3) and which is not rectified by the supplier in his valid return for the month in which discrepancy is communicated shall be added to the output tax liability of the recipient, in such manner as may be prescribed, in his return for the month succeeding the month in which the discrepancy is communicated.

(6) The amount claimed as input tax credit that is found to be in excess on account of duplication of claims shall be added to the output tax liability of the recipient in his return for the month in which the duplication is communicated.

(7) The recipient shall be eligible to reduce, from his output tax liability, the amount added under sub-section (5), if the supplier declares the details of the invoice or debit note in his valid return within the time specified in sub-section (9) of section 39.

(8) A recipient in whose output tax liability any amount has been added under subsection (5) or sub-section (6), shall be liable to pay interest at the rate specified under subsection (1) of section 50 on the amount so added from the date of availing of credit till the corresponding additions are made under the said sub-sections.

(9) Where any reduction in output tax liability is accepted under sub-section (7), the interest paid under sub-section (8) shall be refunded to the recipient by crediting the amount in the corresponding head of his electronic cash ledger in such manner as may be prescribed
Provided that the amount of interest to be credited in any case shall not exceed the amount of interest paid by the supplier.

(10) The amount reduced from the output tax liability in contravention of the provisions of sub-section (7) shall be added to the output tax liability of the recipient in his return for the month in which such contravention takes place and such recipient shall be liable to pay interest on the amount so added at the rate specified in sub-section (3) of section 50.

Introduction

This provision relates to matching, reversal and reclaim of input tax credit. However, the provisions of section 42 shall not be applicable for the financial year 2017-18 due to deferment of filing of Form No. GSTR-2 and GSTR-3. However, the matching of input tax credit and verification of output tax liability would still be done on the basis of GSTR 1 furnished for outward supplies and amount of credit availed by recipient apart from values as made available to him in his Form GSTR 2A, the facility of which is still available to both registered persons as well as to exchequer to ensure that there is no mismatch in output tax paid or payable / input tax credit availed or available, as the case may be.

Analysis

A.                   Matching, reversal and reclaim envisages the following circumstances

SituationRemarks / Comments 
All Transactions where Input credit details of recipient are matched for output tax as stated by supplier and recipient (including cases where amount of input tax credit claimed is less than the amount of output tax paid by supplier on a particular tax invoice)The transaction is treated as matched.
Transactions where the claim of input tax credit is made more than once (i.e., Duplication of claims)Details of such discrepancy shall be communicated to the registered person (only recipient) in FORM GST MIS 1.
Transactions where the claim for input tax credit is higher than the output tax as declared by the supplierDetails of such discrepancy shall be made available to recipient in Form GST MIS-1 and to the supplier in Form GST MIS-2 – Two possibilities:
(a) If discrepancy is due to supplier’s mistake and accepts it, can correct it in GSTR 1 of that month (results in increase in output liability in the hands of supplier).
(b) If discrepancy is due to recipient’s mistake and accepts it, can correct it in statement of inward supply for that month (results in reduction in input tax credit in the hands of recipient).
However, if the same is not rectified by both of them, such amount will get added to output tax liability of such recipient and the said amount is payable along with applicable interest (section 50(1) of CGST Act, 2017).
Transactions where the claim for input tax credit is higher than the output tax as declared by the supplier because the supplier has not furnished a particular transaction.Same as above

 

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