Procedure for Furnishing Return and Availing ITC- Section 43A of GST

Section 43A of the CGST Act laid down the procedure for furnishing returns and availing Input Tax Credit (ITC). However, this section was omitted with effect from 1st October 2022, vide Notification No. 18/2022 – CT dated 28.09.2022, through Section 107 of the Finance Act, 2022. Despite its omission, understanding its provisions is crucial to grasp the ITC framework before its removal.

Verification and Modification of Details in Returns

Under sub-section (1), every registered person was required to verify, validate, modify, or delete the details of supplies furnished by suppliers in their returns filed under Section 39(1). This provision ensured that ITC claims were based on accurate supplier data.

Procedure for Availing Input Tax Credit (ITC)

Sub-section (2) stated that the procedure for availing ITC and its verification would be prescribed separately, overriding Sections 41, 42, and 43. This allowed for a structured mechanism to streamline ITC claims.

Outward Supplies and ITC Claims

Sub-section (3) laid down the process for furnishing outward supply details on the common portal to facilitate ITC claims by recipients. The procedure aimed to align ITC availability with supplier-declared data.

ITC on Unreported Outward Supplies

Sub-section (4) prescribed conditions for availing ITC on outward supplies not reported by suppliers. It allowed ITC claims up to a maximum of 20% of the available credit based on supplier-furnished details, reinforcing compliance.

Deemed Tax Liability of the Supplier

According to sub-section (5), the tax amount specified in outward supply details furnished by suppliers was deemed payable under the Act, ensuring accountability.

Joint and Several Liability of Supplier and Recipient

Sub-section (6) made both the supplier and the recipient jointly and severally liable to pay tax or repay ITC availed in cases where details were furnished but returns were not filed.

Recovery Provisions

Under sub-section (7), recovery of wrongly availed ITC was subject to prescribed procedures, with exemptions for amounts below ₹1,000 to reduce administrative burden.

Special Provisions for Specific Cases

Sub-section (8) laid down additional conditions for furnishing outward supply details in the following scenarios:

• Newly registered taxpayers – Allowed to furnish details within six months of registration.

• Tax defaulters – If default continued beyond two months from the due date, additional safeguards were prescribed.

Omission of Section 43A

The removal of Section 43A w.e.f. 1st October 2022 simplified the ITC mechanism, aligning it with the updated GST return filing system. The new framework primarily relies on GSTR-1, GSTR-2B, and GSTR-3B, where ITC is available based on auto-populated data from supplier returns.

Impact of Section 43A’s Removal

1. Simplification of ITC Process – The government replaced the complex matching system with an automated ITC reflection in GSTR-2B.

2. Reduction in Compliance Burden – Businesses now rely on GSTR-3B for ITC claims without multiple reconciliation requirements.

3. Enhanced Supplier-Recipient Coordination – Buyers must ensure that suppliers file accurate and timely GSTR-1 to prevent ITC loss.

Conclusion

While Section 43A aimed to regulate ITC claims through a structured verification process, its removal streamlined GST compliance. Businesses must now focus on timely GSTR-1 and GSTR-3B filings, ensuring that ITC claims align with GSTR-2B data.

For hassle-free GST compliance, businesses should adopt automated reconciliation tools and stay updated on ITC eligibility rules. Need expert guidance on GST compliance? Contact us today!