π₯ GST ITC available only on Invoices Accepted via Invoice Management System (IMS)
Summary
TLDRThe video discusses recent updates to the GST system, particularly focusing on the Invoice Management System (IMS) introduced in October 2024. Suppliers must upload invoices to the IMS before filing GSTR-1, with recipients able to accept, reject, or pending action on them. Changes to the CGST Act include amendments to credit note provisions, ensuring ITC reversals are managed through the portal. Additionally, Form 3B filing will be possible only after GSTR-2B is available. The video also addresses challenges with technical issues and the requirement for accurate, synchronized data for tax credit calculations.
Takeaways
- π Invoice Management System (IMS) will be implemented from October 2024, allowing suppliers to upload invoices before filing GSTR-1.
- π Recipients will have four actions to take on uploaded invoices: accept, reject, keep pending, or assume acceptance if no action is taken.
- π Accepted invoices will flow into GSTR-2B, which will determine the eligibility for Input Tax Credit (ITC) claims for recipients.
- π The changes to the IMS will require buyers to accept or reject invoices on the portal, impacting the ITC claims before filing GSTR-3B.
- π A major amendment to Section 34(2) will require recipients to reverse ITC when a credit note is issued by the supplier.
- π In the past, recipients manually reversed ITC for credit notes, but the system will now handle this process automatically.
- π A simultaneous adjustment of both the supplier's output tax liability and the recipient's ITC reversal will be required for credit notes.
- π New Rule 67B will specify how suppliers should adjust their output tax liability due to credit notes.
- π Form 3B can only be filed after GSTR-2B for the tax period is made available on the portal, ensuring data consistency.
- π The tax filing process may face temporary delays if GSTR-2B is not generated on time, but extensions will be granted if necessary.
Q & A
What is the purpose of the Invoice Management System (IMS) introduced in October 2024?
-The IMS allows suppliers to upload invoices before filing GSTR1. Recipients can then take actions such as accepting, rejecting, or keeping invoices pending based on specific reasons. This system ensures more accurate tracking and management of GST-related invoices.
What are the four possible actions a recipient can take when invoices are uploaded to the IMS portal?
-The recipient can: 1) Accept the invoice, 2) Reject the invoice if itβs incorrect or unrelated, 3) Keep the invoice pending if goods or services havenβt been received yet, or 4) Take no action, which is considered as deemed acceptance.
How will the acceptance of invoices affect the recipient's Input Tax Credit (ITC)?
-When a recipient accepts an invoice, it will reflect in their GSTR 2B. The ITC will depend on the invoices accepted in the IMS and shown in GSTR 2B before filing GSTR 3B.
What is the significance of the proposed amendment to Section 38 of the CGST Act regarding ITC?
-The amendment to Section 38 will ensure that ITC is dependent on invoices accepted by the recipient in the IMS. This will help streamline the credit process, ensuring that the credit is accurately reflected in GSTR 2B before filing GSTR 3B.
What changes are being made to the process of handling credit notes under GST?
-The proposed amendments to Section 34(2) will require the recipient to reverse the ITC on credit notes through the GSTN portal, ensuring both the supplier's output tax liability and the recipient's ITC reversal occur simultaneously.
How did the process for reversing ITC on credit notes work before the amendment?
-Before the amendment, there was no systematic process to ensure the recipient reversed ITC when a credit note was issued. Suppliers had to obtain certificates from recipients to confirm the reversal of ITC, especially for amounts over βΉ5 lakh.
What are the new rules regarding credit notes exceeding βΉ5 lakh?
-For credit notes exceeding βΉ5 lakh, a CA or CMA certificate is required to ensure proper reversal of ITC. This process is now being moved to the GSTN portal for better automation and tracking.
What is the impact of the new rule stating that GSTR 3B can only be filed after GSTR 2B is available?
-The new rule ensures that GSTR 3B can only be filed after GSTR 2B has been made available on the portal. This guarantees that the accepted invoices are properly reflected in the ITC before filing GSTR 3B, improving compliance and accuracy.
What challenges could arise from the dependency between GSTR 2B and GSTR 3B filing?
-If there are technical issues with generating GSTR 2B on time, businesses might face delays in filing GSTR 3B. However, the government has extended deadlines in the past for such scenarios, and further extensions might be considered in case of technical difficulties.
What is the role of the GSTN portal in the new system for credit note adjustments and ITC reversals?
-The GSTN portal will automate the adjustment of output tax liabilities for suppliers and the reversal of ITC for recipients, ensuring that these processes happen simultaneously and are accurately tracked, removing the need for manual certificates in most cases.
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