Quick Summary
Kerala GST Department has issued a Standard Operating Procedure (SOP) for monitoring ineligible IGST input tax credit (ITC) reversal by taxpayers in return form GSTR 3B. The SOP was issued on August 21, 2023. 1. INTRODUCTION 1.1. After the implementation of GST, the State Revenue constitutes SGST paid in Cash and IGST received through Settlement process in GST. Fund transfer from IGST through Settlement is based on the returns filed by taxpayers. Incorrect reporting of Input Tax Credit of
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FAQ :
The SOP's purpose is to ensure taxpayers properly and timely reverse ineligible IGST credit in their GSTR-3B returns, thereby ensuring the State receives its 50% share of this credit monthly instead of an ad-hoc yearly settlement.
The SOP was issued on August 21, 2023.
Incorrect reporting of IGST ITC can lead to short settlement of funds to the State from the Centre. Proper reversal ensures the State receives its due share of IGST collected.
If a taxpayer fails to reverse ineligible credit after being contacted and reminded, a notice may be issued proposing a penalty for furnishing incorrect returns.
The GSTN Common Portal transmits reports of cross-utilisation of IGST and available funds to the competent authority, which are based on the returns filed by taxpayers. This information is crucial for fund settlement and apportionment.
Examples include ITC on goods or services used for non-business purposes, used for exempted outward supplies (like certain hospital equipment or electricity distribution), or credit that is blocked under Section 17(5) of the GST Act (e.g., certain motor vehicles, construction services for immovable property).
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