1. Practical Approach to GST Annual Return and Audit
Inward Supply & Input Tax Credit
A Presentation by
Arun Kumar Agarwal

2. Definition in relation to Input Tax Credit
Sec.2(63) “input tax credit” means credit of “input tax” in terms of section 2(63).
Sec.2(62) defines “input tax” in relation to a registered person, means Central tax, State tax, integrated tax, Union Territory Tax charged on supply of Goods or Services or both to him and includes IGST on imports, tax paid under reverse charge but does not include Tax paid under Composition Scheme.

3. Contd…
Sec.2(59) “input” means Goods other capital goods used or intended to be used by a supplier in course of furtherance of business.
Sec.2(19) “Capital Goods” goods, the value of which is capitalised in the Books of Account of the person claiming the input tax credit and which are used or intended to be used in the course of furtherance of business.
Sec.2(60) “Input Service” means any service used or intended to be used by a supplier in the course of furtherance of business.

4. Section 16- Eligibility and conditions for taking input tax credit (read with Rule 36, 37 of CGST Rules, 2017)
Credit of input tax charged on supply of goods or services
Goods/Services used in the course or furtherance of business
Taxable supply
ITC Available
Exempt Supply
No ITC
Goods/services used other than for business
Conditions:
Tax paying document-  Tax paid to Govt- 
G/S Received-  Return Furnished- 

5. 16(2): If input recd in lots - credit will be allowed on receipt of last lot
Sec 16(2) and Rule 2: If value of supply along with tax is not paid by recipient to supplier within 180 days of issue of invoice, ITC claimed shall be added in output liability of recipient
16(3): If depreciation is claimed in tax component on cost of capital goods under Income Tax Act, 1961 – credit
16(4): Time limit to avail ITC – due date of furnishing of return U/s 39 for Sept of following FY or furnishing of Annual return – earlier.
Rule 1(3): Tax paid for - demand raised on account of fraud, willful misstatement or suppression of fact – Credit

6. Sec 17 - Apportionment of credit and blocked credits
Goods and services used
(1) Partly for business and partly for other purpose
(2) Partly for taxable supply (inc Zero-rated) and partly for exempt supply
Proportionately –
attributable to business use only
Proportionately –
attributable to taxable supply only (inc zero-rated supply)

7. Avail credit to the extent of taxable supplies, or
Contd...
(4) For Banking Co, Financial Institutions (inc non banking financial co.) – services like deposits/advances/loans
Avail credit to the extent of taxable supplies, or
Avail - 50% of the eligible ITC on inputs, capital goods and input services
Restriction of 50% shall not apply if supply made by one registered person to another registered person , both having same PAN

8. (5) Negative list of ITC
(i) Motor vehicles where seating capacity <=13 (including driver), vessels & aircraft except
Used for further supply of such motor vehicles, vessels & aircrafts
transportation of passengers
imparting training on driving, flying, navigating such vehicles, aircraft & vessels
for transportation of goods & passengers

9. (5) Negative list of ITC
(ii) Services of general insurance, servicing, repair & maintenance as they relate to Motor vehicles, Vessels & aircraft except
motor vehicles, vessels & aircrafts referred in clause (a) or (aa) used for purpose therein
TP engaged in manufacture of such vehicles, vessels or aircraft
Supply of general insurance service i.r.o MV, Vessel or aircraft
(iii) Leasing, Renting or hiring of Motor Vehicles, Vessels or aircraft referred in clause (a) or (aa) except when used for purpose specified therein

10. (b) Supply of goods and/or Services
Negative List Contd…
(b) Supply of goods and/or Services
1. Food and beverages
2. health services, cosmetic and plastic surgery
3. beauty treatment
4. outdoor catering
5. membership of a club
6. health and fitness centre
7. rent-a-cab
8. life/ health insurance
9. leave or home travel concession to employees

11. Contd… Negative list of ITC
(c) Works contract service for construction of immovable property, other than plant and machinery except where outward supply is also works contract service,
(d) G/S received for construction of immovable property other than plant and machinery, on his own account
(e) G/S on which tax paid under composition scheme
(f) G/S received by non-resident taxable person except on goods imported by him
(i) tax recovered on account of fraud, detention & release of goods and confiscation
(h) goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples
(g) G/S used for personal consumption

12. Section 15 (2)- Value of taxable supply
Value of supply = Transaction value Inclusions (DATES)
Taxes, duties, cess, fees and charges levied under any statute other than CGST / SGST / UTGST / GST (Compensation to states) Act if charged separately by the supplier. (a)
Expenses (Incidental) charged by supplier before or at the time of delivery/supply of the goods/services. (c)
Subsidies directly linked to the price excluding subsidies by Central/State Government. (e)
Amount (any) liable to be paid by supplier but incurred by recipient of the supply. (b)
Delayed payment charges= Interest/late fee/ penalty. (d)
Contd....

13. Section 15(3) - Value of taxable supply
Value of supply not to include Discount
Given before or at the time of the supply
Given after the time of supply, provided that
Provided discount has been duly recorded in the invoice issued
Discount is in terms of agreement entered into at or before the time of such supply.
ITC has been reversed by the recipient as is attributable to the discount on the basis of document issued by the supplier.

14. Sec 15 – Contd… Explanation.—For the purposes of this Act,––
(a) persons shall be deemed to be “related persons” if––
such persons are officers or directors of one another’s businesses;
such persons are legally recognized partners in business;
such persons are employer and employee;
any person directly or indirectly owns, controls or holds twenty-five per cent or more of the outstanding voting stock or shares of both of them;
one of them directly or indirectly controls the other;
both of them are directly or indirectly controlled by a third person;
together they directly or indirectly control a third person; or they are members of the same family;
(b) the term “person” also includes legal persons;
(c) persons who are associated in the business of one another in that one is the sole agent or sole distributor or sole concessionaire, howsoever described, of the other, shall be deemed to be related.

15. Procedure of Utilization of Input Tax Credit

16. 1. Relevant Statutory Provisions –
Section 49(5): The amount of ITC available in the electronic credit ledger of the RP on account of –
(a) IGST shall first be utilised towards payment of IGST and balance towards CGST & SGST/ UTGST, in that order;
(b) the CGST shall first be utilised towards payment of CGST and the balance towards IGST;
(c) the SGST/ UTGST shall first be utilised towards payment of SGST/ UTGST and the balance towards IGST;
Provided that ITC on account of SGST/ UTGST shall be utilised towards payment of IGST only where the balance of the ITC on account of CGST is not available for payment of IGST;
(d) the CGST shall not be utilised towards payment of SGST or UTGST; and
(e) the SGST or UTGST shall not be utilised towards payment of CGST.

17. Sections inserted by CGST (Amendment) Act,2018
Section 49A:
Notwithstanding anything contained in sec 49, the ITC on account of CGST, SGST or UTGST shall be utilised towards payment of IGST, CGST, SGST or UTGST, as the case may be, only after the ITC available on account of IGST has first been utilised fully towards such payment.
Section 49B:
Notwithstanding anything contained in this Chapter and subject to the provisions of Sec 49(5)(e) & (f), the Govt. may, on the recommendations of the Council, prescribe the order and manner ITC utilisation.

18. Rule inserted vide Notification No 16/2019- CT (Non-Rate) dated 29. 03
Rule 88A : Order of utilization of input tax credit –
ITC on account of IGST shall first be utilised towards payment of IGST, and the balance towards the payment of CGST, SGST or UTGST, as the case may be, in any order:
Provided that the ITC on account of CGST, SGST or UTGST shall be utilised towards payment of IGST, CGST, SGST or UTGST, as the case may be, only after the ITC available on account of IGST has first been utilised fully.

19. Input Tax Credit IGST CGST SGST / UTGST
2. Order of utilization of Input Tax Credit (Before Amendment)
Input Tax Credit IGST CGST SGST / UTGST
1st: IGST
2nd:CGST
3rd: SGST/UTGST
1st: CGST
2nd:IGST
SGST or UTGST
1st: SGST / UTGST
2nd:IGST
CGST

20. Input Tax Credit IGST CGST SGST / UTGST
3. Order of utilization of Input Tax Credit (After Amendment)
Input Tax Credit IGST CGST SGST / UTGST
1st: IGST
2nd:CGST
3rd: SGST/UTGST
1st: IGST
2nd: CGST
SGST or UTGST
1st: IGST
2nd: SGST / UTGST
CGST

21. Available credit balance
4. Let us take an Example –
Case 1: Before Amendment
In the above case CGST liability of Rs. 300 is paid off by offsetting CGST credit of Rs. 200 and then the remaining liability of Rs. 100 is paid off by utilizing IGST Credit. Same is the case with SGST.
Before amendment, there was flexibility in utilizing IGST credit.
Liability Amount
Credit Amount
Adjustment Order
Balance payment
Available credit balance
1st
2nd
IGST
200 -
CGST
300
CGST - 200
IGST - 100
SGST
SGST - 200

22. Available credit balance
Case 2: After Amendment
After amendment, IGST credit has to be utilized fully for the payment of liability before utilizing any other credit. In the above case CGST liability of Rs. 300 is paid off first by offsetting IGST credit of Rs. 200 and then the remaining liability of Rs. 100 is paid off by utilizing CGST Credit. Thus, leaving credit balance of Rs. 100 in CGST. Then, SGST liability of Rs. 300 is paid off by utilizing SGST credit of Rs. 200 thereby leading to balance payment of Rs. 100.
Note: It seems that after insertion of Sec 49A, there will be an additional cash outflow. Moreover, some credit balance is also remaining unutilized.
Liability Amount
Credit Amount
Adjustment Order
Balance payment
Available credit balance
1st
2nd
IGST
200 -
CGST
300
IGST - 200
CGST - 100
100
SGST
SGST - 200

23. Reversal of ITC

24. Rule – 42 : Input & Input Services
In cases where, there are both exempt & taxable supplies(including zero rated), or business & non-business transactions, reversal of ITC shall be determined in accordance with the following formula prescribed under sub-rule (1) of the said rule.
Particulars
Amount (Rs.)
Total Credit for the Month (T)
*****
Credit exclusively used for Other than Business (T1)
Credit exclusively used for exempt supply (T2)
Blocked Credit as per sec 17(5) (T3)

25. Rule – 42 : Input & Input Services
Particulars
Amount (Rs.)
Credit taken in Electronic Credit Ledger [C1 = T-(T1+T2+T3)]
*****
Credit exclusively used for taxable supply (T4)
Common Credit [C2 = C1-T4]
Exempt supply during taxable period (E)
Total turnover in a state during taxable period (F)
Proportionate Credit to be reversed for exempt supplies [D1 = E/F*C2]
****

26. Contd…
Notes :
Credit attributable to non-business purpose = D2 = 0.05 * C2
Eligible ITC (attributable for business purpose & for effecting supplies other than exempt but including zero rated)
C3 = C2 – (D1+D2)
Credit calculated for Central, State, UT & Integrated separately
ITC calculated using aforesaid formula shall be calculated finally for the year, before the due date of filing return for the month of September following the end of F.Y to which the credit relates
Final amount > Value as per formula : Add excess to outward supply & pay along with interest & Vice-versa.

27. Contd…
Example :
From the following info, get the fig of total ITC available :
Taxable Turnover Rs. 8.0 Crores
Exempted Turnover Rs. 2.0 Crores
Total available Credit Rs. 10 Lacs
ITC attributable exclusively for
Non business purpose Rs. 50,000/-
Exempted business purpose Rs. 1,00,000/-
Blocked Credit Rs. 50,000/-
Business purposes Rs. 5,00,000/-

28. Solution : Net credit available = 5,00,000+2,25,000 = 7,25,000
Particulars
Amt (Rs)
Total Credit (T)
10,00,000
Less : Credit exclusive for other than business purpose (T1)
50,000
Less : Credit exclusive for exempt purpose (T2)
1,00,000
Less : Blocked credit (T3)
Credit as per ledger (C1)
8,00,000
Credit exclusive for business purpose
5,00,000
Common Credit (C2)
3,00,000
Credit reversed for exempt supply (D1= 3lakhs *2 cr/1 cr)
60,000
Credit attributable to non-business purpose (D2= 0.05*3,00,000)
15,000
Total credit available from common credit
2,25,000

29. Rule – 43 : Capital Goods
In cases where, there are both exempt & taxable supplies(including zero rated), or business & non-business transactions, reversal of ITC shall be determined in accordance with the following formula prescribed under sub-rule (1) of the said rule.
S-1 : Calculate common credit, by reducing Total credit with the followings:-
ITC on Non Business Supplies
ITC on Taxable Supplies
ITC on Exempt Supplies
S-2 : Divide common credit by 60 ( ITC on capital goods is allowed for 5 years {12 * 5= 60})

30. Rule – 43 : Capital Goods
S-3 : Follow the process, however, cumulate the ITC on common credit and then divide. S-4 : Common credit should be adjusted, with any change in nature of Capital goods (example, asset used only for exempt supplies, is thereon used for providing taxable supplies) S-5 : Such change is subject to deduction of base points 5% per quarter.

31. Numerical example – Rule 43
Calculate ITC on capital goods available : Solution :
Particulars
August
September
October
Total ITC on Purchase of Capital (A)
12,00,000
16,00,000
6,00,000
ITC of Exempted Business (B)
1,80,000
2,40,000
90,000
ITC of Taxable Supplies (C)
9,60,000
12,80,000
4,80,000
Particulars
August
September
October
Common Credit (A-B-C)
60,000
80,000
30,000
Aggregate Common credit (D)
1,40,000
1,70,000
Period (E) 60

32. Numerical example – Rule 43
Particulars
August
September
October
ITC attributable (F= D/E)
1000
2333
2833
ITC available (C+F)
9,61,000
12,82,333
4,82,833

33. Removal of difficulty Order No 02/2018 dated 31.12.2018
The registered person shall be entitled to take input tax credit after the due date of furnishing the returns u/s 39 for the month of September, 2018 till the due date of furnishing the return u/s 39 for the month of March, 2019 in respect of any invoice or invoice relating to such debit note for supply of goods or services or both made during the F.Y , the details of outward supplies of which have been uploaded by the supplier u/s 37(1) till the due date of furnishing the details of outward supplies u/s 37(1) for the month of March, 2019.
[Proviso inserted in Section 16 (Eligibility and Conditions for taking Input Tax Credit) in sub-section (4) of the CGST Act, 2017]

34. Contd….
The rectification of error or omission in respect of the details of outward supplies furnished u/s 37(1) shall be allowed after the furnishing the return u/s 39 for the month of September, 2018 till the due date for furnishing the details of outward supplies u/s 37(1) for the month of March or for the quarter January, 2019 to March, 2019.
[Proviso inserted in Section 37 (Furnishing details of outward supplies) in sub-section (3) of the CGST Act, 2017]

35. Data flow of ITC from GSTR 3B to GSTR 9 [Annual Return]

36. Statutory Provisions (Act)
Sec 44(1) Every RP, other than an
Input Service Distributor,
a person paying tax under section 51 (TDS),
a person paying tax under section 52 (TCS),
a casual taxable person and
a non-resident taxable person,
shall furnish an annual return for every financial year electronically in such form and manner as may be prescribed on or before the thirty-first day of December following the end of such financial year.
Sec 44(2)- Every RP who is reqd to get his accounts audited shall furnish the A/R along with AAA and a Reco reconciling the value in return with AAFS and other particulars as prescribed.

37. Statutory Provisions (Rules)
Rule 80 (1)- Every RP, other than an ISD / TDS / TCS / CTP / NRTP , shall furnish an annual return as specified under section 44 (1) electronically in FORM GSTR-9 through the common portal either directly or through a Facilitation Centre notified by the Commissioner.
Provided that a Composition Tax Payer shall furnish the annual return in FORM GSTR-9A.
Rule 80 (3)- Every RP whose aggregate turnover during a financial year exceeds two crore rupees shall get his accounts audited as specified under Sec 35 (5) and he shall furnish
a copy of audited annual accounts
and a reconciliation statement, duly certified, in FORM GSTR-9C, electronically through the common portal

38. Annual Return under GST
Other than Composition Scheme / TDS/ TCS/ CTP / NRTP
Form GSTR 9
Composition tax Payer
Form GSTR 9A
TCS – Ecommerce Operator
Form GSTR 9B

39. Form GSTR 9- Bird’s Eye View
Audit under GST
Form GSTR 9- Bird’s Eye View
Basic Details
Pt. I:
Details of Outward and inward (RCM) supplies made during the financial year
Pt. – II (T-4, 5)
Details of ITC for the financial year
Pt. III (T-6,7,8)
Details of tax paid as declared in returns filed during the financial year
Pt. IV (T-9)
Particulars of the transactions for the previous (17-18) FY declared in returns of Apr. to Sept. of current(18-19) FY
Pt. V (T-10-14)
Other Information (Demands/ Refunds- Inward/143/Approval- OS/HSNwise- IS/HSNwise- Late Fee)
Pt. VI (T-15-19)
Information above is true and correct
Verification
Instructions (7 points)
Arun Kumar Agarwal

40. Pt. III: Details of ITC for the financial year
Table 6. Details of ITC availed during the financial year
Table 7. Details of ITC Reversed and Ineligible ITC for the financial year
Table 8. Other ITC related information

42. Sl. No.
Table (GSTR 9)
Form GSTR 9
Reference in GSTR 3B
19. 6A
Total amount of input tax credit availed through FORM GSTR-3B
Table 4A
Guidelines:
1. Total input tax credit availed in GSTR-3B would be auto-populated here.

43. Sl. No.
Table (GSTR 9)
Form GSTR 9
Reference in GSTR 3B
20. 6B
Inward supplies (other than imports and inward supplies liable to reverse charge but includes services received from SEZs)
– Inputs
– Capital Goods
– Input Services
Table 4(A)(5)
Guidelines:
1. Total ITC availed is to be classified as ITC on inputs, capital goods and input services.
2. Not to include details of inward supplies on which tax is payable on reverse charge basis, inward supply of goods from SEZ & import of goods & services
3. Not to include ITC this was availed, reversed and then reclaimed. It shall be shown in Table 6H.

44. Sl. No.
Table (GSTR 9)
Form GSTR 9
Reference in GSTR 3B 21 6C
Inward supplies received from unregistered persons liable to reverse charge (other than B above) on which tax is paid & ITC availed
Table 4(A)(3)
Guidelines:
1. Not to include details of import of services
2. Total ITC availed is to be classified as ITC on inputs, capital goods and input services.
3. It Pertains to RCM u/s 9(4)
4. The above table will contain data from July 1,2017 to October 12, 2017 only as from October 13, 2017 N/N 38/2017 was issued by government to provide exemption from payment of tax under reverse charge for supplies received from unregistered person.
5. Data disclosed under this table should not exceed the data disclosed in table 4G of GSTR9.

45. Sl. No.
Table (GSTR 9)
Form GSTR 9
Reference in GSTR 3B 22 6D
Inward supplies received from registered persons liable to reverse charge (other than B above) on which tax is paid and ITC availed
Table 4(A)(3)
Guidelines:
Total ITC availed is to be classified as ITC on inputs, capital goods and input services.
2. It Pertains to RCM u/s 9(3).

46. Guidelines: 6E Import of goods (including supplies from SEZs)
Sl. No.
Table (GSTR 9)
Form GSTR 9
Reference in GSTR 3B
23. 6E
Import of goods (including supplies from SEZs)
Table 4A(1)
Guidelines:
1. Include supply of goods received from SEZs
2. Total ITC availed is to be classified as ITC on inputs and capital goods

47. Guidelines: Guidelines: 6F
Sl. No.
Table (GSTR 9)
Form GSTR 9
Reference in GSTR 3B
24. 6F
Import of services (excluding inward supplies from SEZs)
Table 4A(2)
Guidelines:
1. Services from SEZs are not import of services.
Sl. No.
Table (GSTR 9)
Form GSTR 9
Reference in GSTR 3B
25. 6G
Input Tax credit received from ISD
Table 4(A)(4)
Guidelines:
1. ITC Received from Input Service Distributor u/s 20 of CGST Act, 2017 shall be declared here.

48. Sl. No.
Table (GSTR 9)
Form GSTR 9
Reference in GSTR 3B
26. 6H
Amount of ITC reclaimed (other than 6B above) under the provisions of the Act
Table 4(A)(5)
Guidelines:
1. Include ITC which was availed, reversed and then reclaimed under the Provisions of the Act.
Example: If any credit was reversed after the expiry of 180 days due to non-payment of value of supply along with tax to the supplier within 180 days, and then subsequently payment is made, the ITC which was reversed shall be reclaimed.

49. Guidelines: Guidelines: 6J Difference -
Sl. No.
Table (GSTR 9)
Form GSTR 9
Reference in GSTR 3B
27. 6J
Difference -
Guidelines:
1. Ideally, this amount should be zero if all the details entered are correct.
Sl. No.
Table (GSTR 9)
Form GSTR 9
Reference in GSTR 3B
28. 6K
Transition Credit through TRAN-I (including revisions if any) -
Guidelines:
1. This shall include details of transition credit received in the electronic credit ledger on filing of GST TRAN-I including revision of TRAN-I(if any)

50. Guidelines: 6L Transition Credit through TRAN-II -
Sl. No.
Table (GSTR 9)
Form GSTR 9
Reference in GSTR 3B
29. 6L
Transition Credit through TRAN-II -
Guidelines:
1. This shall include details of transition credit received in the electronic credit ledger on filing of GST TRAN-II

51. Guidelines: 6M Any other ITC availed but not specified above -
Audit under GST
Sl. No.
Table (GSTR 9)
Form GSTR 9
Reference in GSTR 3B
30. 6M
Any other ITC availed but not specified above -
Guidelines:
Details of ITC availed through ITC01 [Sec.18 (1) of CGST Act, 2017] and ITC-02 [Sec.18 (3) of CGST Act, 2017] in the financial year shall be declared here.
ITC01
• Unregistered person got registered
• Composition dealer opting out of the composition scheme
• Exempted goods become taxable goods
ITC02
In case of transfer of business by way of sale of business / merger / demerger
Arun Kumar Agarwal

53. Guidelines: 7A, 7B,7C, 7D,7E, 7F,7G and 7H
Sl. No.
Table (GSTR 9)
Form GSTR 9
Reference in GSTR 3B
31.
7A, 7B,7C, 7D,7E, 7F,7G and 7H
ITC Reversed & Ineligible as per Rule 37,39,42,43, Sec 17(5), Reversal of Trans I & II Credit etc
Table 4B
Guidelines:
1. Details of input tax credit reversed due to ineligibility or reversals required under rule 37, 39,42 and 43 of the CGST Rules, 2017 shall be declared here.
2. This column should also contain details of any input tax credit reversed under section 17(5) of the CGST Act, If the amount stated in Table 4D of Form GSTR 3B was not included in table 4A of Form GSTR 3B, then no entry should be made in table 7E of Form GSTR -9.However, if amount mentioned in table 4D of Form GSTR 3B was included in table 4A of Form GSTR 3B, then entry will come in 7E of Form GSTR 9.

54. Contd..
3. Details of ineligible transition credit claimed under FORM GST TRAN-I or FORM GST TRAN-II and then subsequently reversed
4. Any ITC reversed through FORM ITC -03 on switching to exemption/composition u/s 18(4) or sale of capital goods u/s 18(6) or cancellation of RC u/s 29(5) read with Rule 44 will get covered here

56. Guidelines: 8A ITC as per GSTR-2A Table 3 & 5 of GSTR-2A
Sl. No.
Table (GSTR 9)
Form GSTR 9
Reference in GSTR 3B
32. 8A
ITC as per GSTR-2A
Table 3 & 5 of GSTR-2A
Guidelines:
1. This table shall have an automated figure.
2. This would be the aggregate of all the input tax credit that has been declared by the corresponding supplies in their GSTR-I.
3. This would not include the input tax credit on imports and inwards supplies liable to reverse charge.
4. GSTR 2A is the reflection of ITC on inward supplies made but it doesn’t determine the eligibility of the credit.

57. Guidelines: 8B ITC as per sum total of 6(B) and 6(H) above -
Sl. No.
Table (GSTR 9)
Form GSTR 9
Reference in GSTR 3B
33. 8B
ITC as per sum total of 6(B) and 6(H) above -
Guidelines:
1. The input tax credit as declared in Table 6B and 6H shall be auto-populated here.

58. Guidelines: 8D Difference [8A-(8B+8C)] -
Sl. No.
Table (GSTR 9)
Form GSTR 9
Reference in GSTR 3B
35. 8D
Difference [8A-(8B+8C)] -
Guidelines:
1. If it is negative, then do recovery from supplier as the input tax credit is not available if the tax has not been paid & GSTR 1 has not been submitted by the supplier [section16(2) of CGST Act, 2017].
2. If +ve, then give explanation in 8E & 8F.

59. Guidelines: 8E & 8F ITC available but not availed / ineligible -
Sl. No.
Table (GSTR 9)
Form GSTR 9
Reference in GSTR 3B
36.
8E & 8F
ITC available but not availed / ineligible -
Guidelines:
1. Aggregate value of the input tax credit which was available in GSTR2A but not availed in any of the GSTR-3B returns or ineligible credit shall be declared here.
Therefore, any input tax credit remained un-availed should be shown in Sep 2018 return or else it will lapse (section 16(4) of CGST Act, 2017).

60. Sl. No.
Table (GSTR 9)
Form GSTR 9
Reference in GSTR 3B
37. 8G
IGST paid on import of goods (including supplies from SEZ) -
Guidelines:
1. Aggregate value of IGST paid at the time of imports (including imports from SEZs) during the financial year shall be declared here.
Import Documents evidencing payment of custom duty (which included IGST) shall be used to fill this row.

61. Guidelines: Guidelines: 8H IGST credit availed on import of goods -
Sl. No.
Table (GSTR 9)
Form GSTR 9
Reference in GSTR 3B
38. 8H
IGST credit availed on import of goods -
Guidelines:
1. The input tax credit as declared in Table 6E shall be auto-populated here.
Sl. No.
Table (GSTR 9)
Form GSTR 9
Reference in GSTR 3B
39. 8I
Difference -
Guidelines:
1. Ideally, this should be nil.

62. ITC available but not availed on import of goods -
Sl. No.
Table (GSTR 9)
Form GSTR 9
Reference in GSTR 3B
40. 8J
ITC available but not availed on import of goods -
Sl. No.
Table (GSTR 9)
Form GSTR 9
Reference in GSTR 3B
41. 8K
Total ITC to be lapsed in current financial year -

63. Practical Example of data appearing in Annual Return
CGST – 100
SGST – 100
IGST
Mr X Claimed ITC through GSTR 3B in the month of July’17
CGST - 10
SGST -10
ITC reversed as per Rule 37 due to non payment of consideration within 180 days in the month of January’18
CGST -5
SGST - 5
ITC reclaimed on proportionate payment of consideration in Feb’18 – third proviso of Sec 16(2) of CGST Act,2017
The presentation of the given data in annual return of financial year is shown in the next slide.

65. Data flow of ITC from GSTR 9 to GSTR 9C

66. Audits under GST Mandatory Audit (turnover based) u/s 35(5)
Audit by Tax Authorities
u/s 65
Special Audit by nominated CA or CMA
u/s 66

67. Audit
u/s 35(5)

68. Form GSTR 9C – Part A (Reconciliation)
Audit under GST
Form GSTR 9C – Part A (Reconciliation)
Basic Details
Pt. I:
Reconciliation of Turnover in Audited Financial Statement and Annual Return (GSTR 9)
Pt. - II
Reconciliation of Tax Paid
Pt. III
Reconciliation of ITC
Pt. IV
Auditors recommendation on Additional Liability due to non-Reconciliation
Pt. V
Information above is true and correct [Auditor]
Verification
Instructions (8 points)
Arun Kumar Agarwal

69. Form GSTR 9C – Part B (Certification)
Certification in cases where the reconciliation statement (GSTR 9C) is drawn up by the person who had conducted the audit
Certification in cases where the reconciliation statement (GSTR 9C) is drawn up by a person other than the person who had conducted the audit of the accounts

70. Reconciliation of Input Tax Credit (ITC)
Annual Reconciliation Format: Table 12
Pt. IV
Reconciliation of Input Tax Credit (ITC) 12
Reconciliation of Net Input Tax Credit (ITC) A
ITC availed as per audited Annual Financial Statement for
the State/ UT (For multi-GSTIN units under same PAN this should be derived from books of accounts)
(-) B
ITC booked in earlier Financial Years claimed
in current Financial Year
(+) C
ITC booked in current Financial Year to be
claimed in subsequent Financial Years D
ITC availed as per audited financial statements or books of
account
<Auto> E
ITC claimed in Annual Return (GSTR9) F
Un-reconciled ITC
ITC 1

71. Reconciliation of Input Tax Credit
Total ITC
As per Books
As per GSTR 9
Filed in
Filed in
As per 7J

72. Electronic Credit Ledger Vs ITC A/c’s as per Books of Accounts Vs GSTR 2A

73. GSTR 3B v/s GSTR 2A Statutory Provisions :
Sec 41(1) – Every RP is entitled to credit of eligible ITC, as self-assessed, in his return & amt shall be credited on provisional basis in e-credit ledger.
Sec 42(1) – Details of every inward supply furnished by recipient, be matched with details of outward supply by the supplier.
Rule 60 (1) – Every RP, other than specified, require to furnish details of inward supplies u/s 38(2) shall on the basis of details of Form GSTR-2A, prepare details specified in Sec 38(1) & furnish in Form GSTR-2
Rule 61(1) - Every RP, other than specified, shall furnish a return u/s 39(1) in Form GSTR-3

74. GSTR 3B v/s GSTR 2A
Rule 69 – The details relating to claim of ITC provisionally allowed u/s 41 shall be matched under Sec 42 after due date for furnishing return in Form GSTR-3.
Provided where time limit of GSTR-1 u/s 37 & GSTR-2 u/s 38 has been extended, date of matching ITC shall be extended accordingly.

75. GSTR 3B v/s GSTR 2A Abeyance of matching concept:
Circular no. 7/7/2017-GST dated – It states that system based reconciliation of GSTR 3B with GSTR -1 & GSTR - 2 will be done.
Govt vide Circular No. 26/26/2017-GST dated states that system based reconciliation prescribed under Circular No. 7/7/2017-GST dated 1st September 2017 can only be operationalized after the relevant notification is issued prescribing time period for filing of Form GSTR-2 & 3 for the month of July’17 to March’18. The said circular is therefore kept in abeyance till such time.

76. Electronic Credit Ledger
In the Electronic Credit Ledger, all credits accrued on account of inward supplies made by a taxpayer within a tax period are accumulated. The ledger is maintained Major Head-wise, i.e., IGST, CGST, SGST, and CESS.
The Electronic Credit Ledger is maintained by the GST System.
Taxpayers can view their Electronic Credit Ledger in the post login mode by logging on to the GST Portal. Path: Services > Ledgers > Electronic Credit Ledger

77. GSTR 2A
GSTR 2A is a self-generated statement where visibility of all incoming supplies made by your supplier in GSTR 1 has been made available to recipients. The details will be made available on the submission of returns in the portal.
There are two ways by which a registered taxable person can view the data generated by GSTR 2A return.

78. GSTR 2A
The details can directly be viewed on the GST portal by making a login and accessing the return filing segment which stacks in other returns of the taxable person or can download GSTR 2A file and view it in the offline utility tool.
Note: In the form GSTR 2A, invoice / records up to 500 for a table / section can be seen online if the invoice is more than 500, the common portal will create a GSTR 2A file and the registered taxable person shall view these details of the invoice in the offline utility tool available on the Goods and Services Tax Portal.

79. Examples showing Mismatch between Input Tax Credit
Mr X is engaged in the business of ‘Knitted Inner Garments’, he purchased raw material of Rs 5,25,000/- (including GST of Rs 25000/-) and he also purchased a car worth Rs 6,40,000/- (including GST of Rs1,40,000/-) from registered persons.
ITC claimed in GSTR 3B
Eligible ITC claimed in 4A(5) /-
Ineligible ITC disclose in 4D(1) – 1,40,000/-
ITC as per books of Accounts (separate ledger maintained)
Eligible ITC – 25000/-
Ineligible ITC –1,40,000/-
ITC Showing in GSTR 2A
Eligible ITC – 1,65,000/-

80. ITC as per books of Accounts
Contd...
Mr Y purchased goods from Mr D worth Rs 4,20,000 (including GST of Rs 20000). Mr D while filling its GSTR 1 uploaded the bill issued to Mr Y in the name of Mr X and the above mistake has not been corrected by Mr D till March,2019.
ITC claimed in GSTR 3B
Eligible ITC claimed in 4A(5) /-
ITC as per books of Accounts
Eligible ITC – 20000/-
ITC Showing in GSTR 2A
Eligible ITC – NIL

81. ITC as per books of Accounts
Contd...
Mr Y purchased goods from Mr D worth Rs 4,20,000 (including GST of Rs 20000). Mr D while filling its GSTR 1 uploaded the bill issued to Mr Y in the name of Mr X and the above mistake has not been corrected by Mr D till March,2019.
Situation of Mr Y as on
ITC claimed in GSTR 3B
Eligible ITC claimed in 4A(5) /-
ITC as per books of Accounts
Eligible ITC – 20000/-
ITC Showing in GSTR 2A
Eligible ITC – NIL

82. ITC as per books of Accounts
Contd...
Situation of Mr X as on
ITC claimed in GSTR 3B
Eligible ITC claimed in 4A(5)- NIL
ITC as per books of Accounts
Eligible ITC – NIL
ITC Showing in GSTR 2A
Eligible ITC – 20000/-

83. ITC as per books of Accounts
Contd...
Mr Y purchased goods from Mr D worth Rs 4,20,000 (including GST of Rs 20000) against invoice no 224. Mr D while filling its GSTR 1 uploaded the same bill twice firstly against invoice no 224 and secondly under invoice no 225. The above mistake has not been amended till return filling date of March,2019.
ITC claimed in GSTR 3B
Eligible ITC claimed in 4A(5) /-
ITC as per books of Accounts
Eligible ITC – 20000/-
ITC Showing in GSTR 2A
Eligible ITC – 40000/-

84. ITC as per books of Accounts
Contd...
Mr X registered party under West Bengal purchased goods from Mr Y of West Bengal worth Rs 2,10,000 (including CGST-5000 and SGST- 5000).Mr Y while filling its GSTR 1 has mistakenly changed the place of supply to Delhi.
Situation of Mr X as on
ITC claimed in GSTR 3B
Eligible ITC claimed in 4A(5):
CGST
SGST
ITC as per books of Accounts
Eligible ITC
CGST
SGST
ITC Showing in GSTR 2A
Eligible ITC:
IGST

85. Transitional Arrangements for Input Tax Credit
Section
Particulars
140(1)
Carry forward of tax credit claimed in the tax returns.
140(2)
Carry forward of unavailed tax credit in relation to capital goods.
140(3)
Carry forward of tax credit by a registered person, who was not liable to be registered under the erstwhile law but the same has become liable under GST.
140(4)
Carry forward of tax credit by a registered person, who was engaged in the manufacture of taxable as well as exempted goods or provision of taxable as well as exempted service but which are liable to tax under GST.
140(5)
Tax Credit in respect of inputs or input services received on or after the appointed day but the duty or tax in respect of which has been paid by the supplier under the erstwhile law.

86. Section
Particulars
140(6)
Carry forward of tax credit by a registered person, who was either paying tax at a fixed rate or paying a fixed amount in lieu of the tax payable under the erstwhile law.
140(7)
Tax credit on account of any services received prior to the appointed day by an ISD.
140(8)
Carry forward o tax credit in case of service provider registered on centralized basis.
140(9)
Tax credit reversed due to nom-payment of the consideration within a period of three months under Finance Act,1994.
140(10)
Tax credit of credit under sub-sections (3),(4) and (6)shall be calculated in such manner as be prescribed.

87. Transition Form- 1
As per section 140, every registered person under GST regime (but not a composite dealer) should submit a declaration electronically in FORM GST TRAN- 1, if they are entitled to claim ITC of stock as on
Form TRAN 1 can be filed by a person who is registered under GST & wants to claim ITC on stock, whether he was registered or not registered under the old regime(VAT Act, Central Excise Act, Service Tax Act) is immaterial. .

88. Contd...
The amount of credit specified in the declaration in FORM GST TRAN-1 shall be credited to the electronic credit ledger of the applicant maintained in FORM GST PMT-2 on the Common Portal.
FORM TRAN 1 is not only for availing credit of ITC on stock, it is to be filed also when a registered person has purchased capital goods and was unable to claim the full amount of tax paid during the purchase, the remaining amount can be claimed under GST. .

89. Transition Form- 2
The registered person availing the scheme as mentioned in Rule 117(4) of CGST Rules,2017 and having furnished the details of stock held by him in accordance with the provision of clause (b) of sub-rule (2), submits a statement in Form GST TRAN - 2
The amount of credit specified in the declaration in FORM GST TRAN-2 shall be credited to the electronic credit ledger of the applicant maintained in FORM GST PMT-2 on the Common Portal. .

90. Transition Form - 3
Form TRAN – 3 shall be filed by the person as mentioned below:
Dealer who have received Credit Transfer Document (CTD) issued by manufacturer
Manufacturer who has issued CTD to dealers
Every registered person who was registered under Central Excise Act’ 1944 and has issued Credit Transfer Document (CTD) and every registered person who is making use of ‘Credit Transfer Document’ to avail transitional credit is required to file ‘Form GST TRAN – 3’ within 60 days of the appointed date.

91. Arun Kumar Agarwal www.arsconsultants.net info@arsconsultants.net
Arun Kumar Agarwal