ITC on Credit note updated late in GSTR3B

ITC / Input 240 views 2 replies

E.KALAIKOVAN

Sr. Accounts Manager

350 Points Joined October 2009

ITC on Credit notes are accounted in General ledger (Books of Accounts). But the credit notes are not appearing in ITC Report. While doing reconcilation between ECL and GL found that Credit notes are not updated in GSTR3B.

In FY 2021-22, We have reversed ITC on credit note in GSTR3B. This FY ITC Reversal is more than the Previous Financial year and not matching ITC proporationate Ratio. Hence ASMT-10 notice received.

In FY 2021-22 the Following year credit notes are reversed. FY 2018-19, FY 2019-20 and 2020-21. FY 2020-21 is reversed within the time limit. FY 2018-19 and 2019-20 are late reversed by us. We have good ECL Balance.

Questions :

01. Will be there any interest and penalty on late reversal of Credit notes?

02. The proper officer can disallow the Credit notes for the late reversal?

Thank you

Replies (2)

Rama chary Rachakonda

Master in Accounts & high court Advocate

9004 Points Joined December 2011

Let's address your questions regarding the late reversal of credit notes and its impact on Input Tax Credit (ITC):

Interest and Penalty - *Interest on Late Reversal*: Yes, interest might be applicable on the late reversal of credit notes.

According to GST regulations, interest is payable on the wrongly availed ITC, and the interest rate is specified under the GST Act. -

*Penalty*: Penalty might also be imposed for the late reversal, depending on the discretion of the proper officer.

The penalty amount would depend on the specific circumstances and the officer's decision. Disallowance of Credit Notes -

*Discretion of Proper Officer*: The proper officer has the discretion to disallow the credit notes if the reversal is not done in accordance with the GST regulations.

However, if you have sufficient ECL balance and have reversed the ITC, albeit late, the officer might consider this while making a decision. -

*Relevance of Timely Reversal*: Timely reversal of ITC on credit notes is crucial to avoid any potential disputes or penalties.

Since you have reversed the ITC for FY 2020-21 within the time limit, but late for FY 2018-19 and 2019-20, the officer might scrutinize these reversals.

Next Steps - *Respond to ASMT-10 Notice*: It's essential to respond to the ASMT-10 notice, providing detailed explanations and supporting documentation for the late reversal of credit notes. -

*Consult a Tax Professional*: Given the complexity of GST regulations, consulting a tax professional can help you navigate this issue and ensure compliance with GST laws. Key Considerations -

*GST Regulations*: Ensure you comply with all GST regulations, including timely filing of returns and payment of taxes. -

*Documentation*: Maintain proper documentation, including records of credit notes, ITC reversals, and any communication with the GST department.

By addressing these points and taking appropriate action, you can mitigate potential consequences and ensure compliance with GST regulations.

E.KALAIKOVAN

Sr. Accounts Manager

350 Points Joined October 2009

Sir,

The time lime to avail ITC in respect of any invoice or Debit note u/s 16(4) of CGST Act, through any return in Form GSTR-3B return filed upto November 30, 2021 may be deemed to be 30/11/2021.

Relaxation for the availment of ITC for the FY 2017 to 2021 u/s 16(4) is given through the 53^rd GST council meeting recommendation. Hence the proper officer can accept the ITC on Credit note updated for the FY 2018-19 and 2019-20 in the FY 2021-22 before November 2021

Thank you