The seamless flow of Input Tax Credit (ITC) is one of the primary features of GST.
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.
- 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
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