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ITC as per GSTR-2A or GSTR-2B. The Conclusion?

In this Article, you would learn - 1. What is Form GSTR-2A? 2. What is Form GSTR-2B? 3. Provisions of Rule 36(4)? 4. Basis and comparison b/w GSTR-2A and GSTR-2B? 5. Pros and Cons of GSTR-2A & GSTR-2B? 6. Conclusion.

The introduction of two auto-generated returns/ forms, namely Form GSTR-2A and Form GSTR-2B, has created huge chaos amongst the taxpayers under GST. Majorly the confusion revolves around return/ form to be taken as base for availing Input Tax Credit vis-à-vis satisfying the provisions of rule 36(4) of the Central Goods and Services Tax Rules, 2017.

The present article briefly explains forms GSTR-2A and GSTR-2B and also tries to clarify the base to be taken for complying with provisions of rule 36(4) of the CGST Rules.

What is Form GSTR-2A?

Form GSTR-2A covers details of auto-drafted supplies. Basically, it is a dynamic statement that is auto-generated based on the details of outward supplies furnished by the supplier.

Notably, the GSTN portal auto-generates Form GSTR-2A by collecting details from the following list of returns-

Returns	Particulars
Form GSTR-1	Details of outward supplies of goods/ services furnished by a normal taxable person
Form GSTR-5	Return filed by Non-resident taxable person
Form GSTR-6	Return filed by Input Service Distributor
Form GSTR-7	Return filed by a person liable to deduct tax (TDS)
Form GSTR-8	Return filed by the person liable to collect tax (TCS)

Additionally, Form GSTR-2A also covers details of IGST paid towards import of goods as well as supply of goods from SEZ units and SEZ developers.

In nut-shell, Form GSTR-2A reflects the inward supplies and corresponding Input Tax Credit available to the taxable person.

What is Form GSTR-2B?

On the other hand, Form GSTR-2B covers details of the auto-drafted Input Tax Credit Statement.

Vide press release dated 29^th August 2020, the Government introduced new Form GSTR-2B. Notably, the same was made effective from 1^st January 2021 as per notification no. 82/2020- Central Tax dated 10^th November 2020.

Interestingly, the new form GSTR-2B is also auto-generated and reflects the Input Tax Credit available to the taxable person.

GSTN portal auto-generates Form GSTR-2B by collecting details from the following returns-

Returns	Particulars
Form GSTR-1	Details of outward supplies of goods/ services furnished by a normal taxable person
Form GSTR-5	Return filed by Non-resident taxable person
Form GSTR-6	Return filed by Input Service Distributor

Further, the details of imports of goods would also be reflected in Form GSTR-2B by collecting the data from the ICEGATE.

Form GSTR-2B gets auto-generated and made available on the 12^th of every succeeding month. Form GSTR-2B briefly bifurcates and reflects input tax credit available as well as not available to the taxable person.

During the 42^nd GST Council Meeting held on 5^th October 2020, it was recommended auto-population of ITC from supplier’s Form GSTR-1 through the newly developed facility in Form GSTR-2B for monthly filers with effect from 1^st January 2021 and for quarterly filers with effect from 1^st April 2021.

As per the GSTN update dated 15^th December 2020, the amount of Input Tax Credit as per Form GSTR-2B will be auto-populated in Form GSTR-3B.

Provisions of rule 36(4) of the Central Goods and Services Tax Rules, 2017

Now, let us refer to the provisions of rule 36(4) of the CGST Rules, 2017 which is a root cause of all the confusion.

As amended from time to time, rule 36(4) of the CGST rules, 2017 simply states that Input Tax Credit availed in respect of invoices/ debit notes (the details of which has not been furnished/ filed by the supplier) will not exceed 105% of the eligible Input Tax Credit available in respect of invoices/ debit notes (the details of which are furnished/ filed by the supplier).

As seen above, Form GSTR-2A contains details of inward supplies and ITC. Similarly, Form GSTR-2B contains details of ITC.

With the implementation of form GSTR-2B from 1^st January 2021, the confusion regarding the base to be taken for computation of 105% of eligible ITC as per rule 36(4) is continuously hindering the trade and industry.

The answer to the above confusion will be clarified to some satisfactory extent herein below.

Basis for availment of Input Tax Credit (GSTR-2A or GSTR-2B)?

In order to come to some conclusion, firstly, it is important to understand the basic difference between Form GSTR-2A and Form GSTR-2B which is tabulated hereunder-

Comparison between GSTR-2A or GSTR-2B?

Sr. No.	Form GSTR-2A	Form GSTR-2B
1	It is dynamic in nature. Meaning thereby that the amount of Input Tax Credit keeps changing on the basis of details uploaded by the supplier.	It is static in nature. This means that the amount of Input Tax Credit for a specific tax period gets frozen on the completion of the due date of Form GSTR-1 or Invoice Furnishing Facility (IFF).
2	It doesn’t provide bifurcation of eligible and ineligible Input Tax Credit.	It briefly bifurcates eligible as well as ineligible Input Tax Credit.
3	It is available at any point of time since the same is updated continuously.	It can be generated after the 12th day of every succeeding month.

The above differences make it clear that details available in Form GSTR-2A would be continuously updated, whereas, the details available in Form GSTR-2B would be fixed at one point of time.

* Conclusion *

Conclusion as to which form to refer while claiming ITC - GSTR2A or GSTR2B?

Form GSTR-2A and Form GSTR-2B both cover details of Input Tax Credit. Therefore, practically, any form can be taken as base for complying with the provisions of rule 36(4) of the CGST Rules, 2017. 

Our answer is subjective and geos with the approach to be adopted by taxpayer, because GST law is silent in the regard. Nevertheless, the departmental clarification in the matter would be a sigh of relief for the trade and industry.

1. GSTR-2B

If the taxpayer is looking for more convenient way to claim ITC and maintain reconciliation, then taxpayer should go with GSTR-2B. Below are pros and cons of GSTR-2B.

Pros

• Data of Form 2B is auto populated in GSTR-3B by GSTN.
• Maintaining reconciliation is easy.

Cons

• In this option, flow of ITC may be delayed by one month. So taxpayer's working capital flow may be disturbed.
• However, if taxpayer is opting GSTR-2B as base for the very first time, then there are chances of duplicacy of bills from previous months, if their supplier files late return for previous periods in the current period (i.e. after cut off date for generation of GSTR-2B). Taxpayer needs to eliminate these bills from auto populated data of GSTR-2B -> GSTR-3B.

Hence, for the sake of convenience, details in Form GSTR-2B can be taken as a base for complying with the provisions of rule 36(4) of the CGST Rules, 2017.

2. GSTR-2A

If taxpayer is looking for a more beneficial option in terms of monetary benefit, then taxpayer should go with GSTR-2A.

Pros

• Since GSTR-2A is a dynamic form, it will continue to be updated on real time basis even after cut off date of GSTR-2B for that month till the taxpayers actually files its GSTR-3B. Therefore by taking base of GSTR-2A, taxpayer can avoid deffering of his ITC by one month. And it will also have a positive effect on working capital of taxpayer.

Cons

• Data of Form 2A is not auto populated in GSTR-3B by GSTN.
• Maintaining reconciliation is slightly difficult.

Hence both options, are valid and legal in the eyes of law. Taxpayer can choose any one keeping in mind pros and cons of both.

:

GSTR-2B

:

Input Tax Credit

:

GSTR-2A

Good explanation.

Thanks.

Very good

Nicely explained.
Thanks

Very good.

3b file kelyananter 2a la Pur invoice disat asel tar Kay katayache

very nice conclusion where law is silent, here is a option to choose by the taxpayer for his own base records

Good

Good valuable information.

The explanation for the difference between the GSTR 2A & 2B is very useful thank you very much

Very knowledgeable explained

Suppose I forgot to reflect one invoice of April month in my GSTR 1 and takes in May. Now this invoice will reflect in GSTR 2A for the month of April and 2B for the Month of May to my recipient. Am I correct?

Replied to CA Aakash Gupta

correct

The explanation for the difference between the GSTR 2A & 2B is very useful thank you very much.

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