The seamless flow of Input Tax Credit (ITC) is one of the primary features of GST.
What’s ITC?
The input tax credit, commonly referred to as ITC, is the tax paid by a business on the purchase of goods and/or services, which can be used to reduce the tax liability in the event of a sale.
What is GSTR 2B?
GSTR 2B is a system-generated ITC statement that has been recently introduced on the GST portal. This statement is generated on a monthly basis and aims to simplify the ITC claims for registered taxpayers.
Now let us understand the working of ITC & GSTR 2A
As per the law, the supplier of the goods is required to furnish the details of sales (invoices & debit notes) in its monthly return in GSTR 1.
When a business tries to reconcile the ITC manually, it becomes difficult. So, a new return was introduced by the GST authorities in the form of GSTR 2B. This is an auto-populated statement based on the details furnished by the respective supplier in GSTR 1/5/6.
- The statement gets auto-generated on the 12th of the succeeding month
- The details, in Form GSTR-2B, are auto-populated on the basis of the following returns furnished by the suppliers/ seller-
- Form GSTR-1;
- Form GSTR-5;
- Form GSTR-6; and
- Import data as received from ICEGATE.
It provides a detailed and lucid representation of ITC that is both available or unavailable for each document, such as an invoice furnished by the suppliers.
Conclusion:
- With effect from 1 Jan 2022, ITC is available equivalent to what is reflected in GSTR 2B.
- This means, the seller has to compulsorily file a return for you to claim ITC. So, one cannot claim excess of ITC as reflected in GSTR 2B.
- GSTR 2B helps in GST reconciliation and minimizes return errors
Have questions? Shoot’em here.