GSTR 2A: Background, Return Filing Status, GSTR 2B Content

GST law seeks to ensure the accurate transfer of input tax credit (ITC) between the states and the parties in the transaction. Invoice matching is a concept wherein all the taxable supplies procured by a buyer and supplied by a seller are matched. The law has mandated the reconciliation with transactions reported by the vendor vide Rule 36(4) of the Central Goods and Services Tax Act 2017 (hereinafter referred to as “CGST Act”) wherein ITC that can be availed is limited to 110% of available ITC reported by the vendors. GSTR 2A and GSTR 2B provide the transactional data of the invoices reported by the vendor.

In this article, we are going to talk about the multiple changes around GSTR 2A and GSTR 2B and its implications.

List of Topics Covered:

GSTR 2A - Background

GSTR 2A is a tax return, which is auto-created by the GSTN portal to capture purchases and ITC related data. It is a read-only document that cannot be altered or modified. For any amendments, the recipient has to reach out to the supplier. Once a supplier files his GSTR 1 i.e. return for outward supply, GSTR 2A fetches data from the vendors GSTR 1 and creates a statement to reflect ITC related data. Apart from GSTR 1, GSTR 2A also fetches data from GSTR 5 (Non-resident seller), GSTR 6 (Input Service Distributor), GSTR 8 (E-commerce), and GSTR 7 (Persons deducting TDS). Basis the credit available in GSTR 2A, an assessee can claim ITC in GSTR 3B. While it is not imperative that the ITC amount should be the same in both returns i.e. GSTR 2A and GSTR 3B, a reconciliation of the two returns is important for the reason that GSTR 2A is a GSTN generated ITC statement. A reconciliation between both GSTR 2A and 3B shall ensure that the ITC in books is in tandem with ITC as per revenue authorities. Further, a reconciliation between GSTR 3B and GSTR 1 of the supplier is also essential to reconcile the turnover offered to tax and would resolve reconciliation issues arising at the time of filing GSTR 9 and GSTR 9C.

Implications Of Rule 36(4) Of CGST Act

In October 2019, the CBIC inserted sub-rule 4 to Rule 36 of CGST Rules, 2017 wherein the ITC claimed is restricted to the extent of 10% (20% from October 2019 to December 2019) of the eligible credit available in the GSTR 2A. Post amendment, the taxpayer is now supposed to put the remaining ITC pertaining to the invoices and/or debit notes not uploaded by the supplier in abeyance and can only claim this credit when the respective invoices or debit notes are actually uploaded by the supplier. In common parlance, the ITC claimed in GSTR 3B should not be exceeding 110% of the ITC reflected in GSTR 2A to be checked on the due date of filing of GSTR 1 of the same month itself. Well, it is as complicated as it sounds; therefore, let’s understand by way of a numeric illustration: ITC available as per books of accounts (GST on inward supplies) = 100 ITC appearing in GSTR 2A (GST as per the returns uploaded by suppliers) = 70 ITC available as per amended Rule 36(4) = 77 ITC in abeyance (temporarily on hold) = 100-77 = 23 Hence, as per the above example, while the taxpayer was eligible to avail the provisional ITC of Rs 100/- before the amendment, it comes down to Rs. 77/- post amendment.

Interlinking With ICEGATE

Earlier, the IGST credit accrued on account of imports and IGST on purchases from SEZ were not being reflected in GSTR 2A. The assesse had to manually reflect these credits in GSTR 3B and this was always a reconciliation item. Further, on imports, the recipient of goods or services is liable to determine and pay tax under the reverse charge mechanism. Therefore, a taxpayer discharges GST on imports and avails credit of the same immediately in the same month.

However, recently two new tables have been introduced in GSTR 2A to capture import details or details of bill of entry (including purchases from SEZ). Such data will be auto-populated from the ICEGATE portal. With this move, a comprehensive picture shall be available to an assesse with the entire credit available at one click. A screenshot of the new tables is attached below:

Issues surrounding the amendment:
However, it is unclear as to whether the inter-linking is done between GSTR 2A and ICEGATE only or the ITC shall flow to GSTR 3B also. Further, in case an error has been committed while filing import documents, the ITC could be impacted and unless the amendment is made on ICEGATE, GSTR 2A shall also not reflect such correct amount. Further, it has also been proposed that ITC in GSTR 3B would also be linked with GSTR 2A, 2B, and ICEGATE portal. This means that even the slightest of errors in one place would affect 4 forms at once. There is ambiguity on the amendments or corrections done to any of these forms; will such corrections be reflected at all other forms on a real-time basis.

Another issue that comes to the fore is the time lag between the flow of ITC data between the ICEGATE portal and GSTR 2A. It is unclear as to whether the data flow on a real-time basis or a standard lag can be expected.

GST Return Filing Status Of Vendors Would Be Visible

The return filing status of vendors (GSTR 1, GSTR 5, and GSTR 3B) will now be visible or available to an assesse. Along with return filing status (i.e. Yes or No), the return filing date and period would also be visible to the taxpayer. A screenshot is attached below for easy reference:

When GST was introduced, there was a huge hullaballoo regarding the conditions stipulated to claim ITC. Such uproar was with respect to one specific condition i.e. the vendor should have filed their return and paid taxes in order for the recipient to claim ITC. It has been extremely difficult to track and follow-up with the vendors to meet such conditions especially when there was no way to ensure whether vendors filed their returns and paid tax or not. To ease out this hassle, the status of returns filed by vendors (both GSTR 1 and GSTR 3B) would now be visible or available to an assesse. There were certain instances wherein the ITC appeared in GSTR 2A but GSTR 3B was not filed by vendors resulting in non-payment of tax by the vendor. Consequently, though the recipient was not entitled to ITC, he availed it basis the reflection in GSTR 2A. This led to penal and interest provisions being triggered. Such situations can be avoided in the future with the help of the columns added.

Status Of Amendment Of Invoice With Month Of Amendment

A new feature added to GSTR 2A is the availability of invoice amendment details to the recipient. Earlier, this was a huge challenge as the recipient was not informed of any amendments made to original invoices or the period in which such an amendment is carried out. A screenshot of the same is attached below:

The details of amended invoices will be extremely helpful at the time of reconciliation. It is a well-known fact that reconciliation under GST is a herculean task. However, steps like these help to identify if any invoices have been amended by the supplier, and if yes, when and during which month were such invoices amended. This aids in the period end reconciliations.

GSTR 2B – An Introduction

On 29 August 2020, the Government vides a press release introduced Form GSTR 2B. GSTR 2B is a read-only static report which will be generated on a monthly basis to reflect the ITC available to any registered person. It can be said to be another avatar of GSTR 2A, with different functionalities. The objective of the statement shall be reducing errors, minimizing time and efforts, assist in reconciliations. The following features are available:

The report will contain information furnished by suppliers in their respective GSTR-1, GSTR-5 (non-resident taxable person), and GSTR-6 (input service distributor). Details of import of goods would be collated from the ICEGATE and inward supplies from SEZ Units/Developers would be auto-populated into GSTR-2B.
GSTR-2B will clearly reflect “ITC available and not available” for every invoice on a monthly basis. It will be made available on the 12th of every succeeding month after the suppliers file their GSTR 1 on the 11^th of every month. (For eg. GSTR-2B generated on 12th September 2020 shall contain invoices uploaded and filed by suppliers between 12th August 2020 to 11th September 2020).
GSTR-2B will have tables that will be directly linked to the Form GSTR-3B.

Contents Of GSTR 2B

The Contents of the GSTR 2B return are as under: –

Summary statement ITC available and not available for every section;
Advisory for every section that clarifies the action to be taken for GSTR 3B;
Document wise details such as invoices, debit-notes, credit notes, etc. to view and download;
Cut-off dates and advisory for generating and using GSTR 2B
ITC on import transactions

Birds Eye View - ITC Available & Not Available

GSTR 2B is expected to give a bird’s eye view to the assesse and management as to ITC available for set-off and ITC not available. It shall also ensure that no ITC is availed twice, no ineligible ITC is availed and no ITC is missed out on; which would bring cost efficiencies the system in form of reduced interest and penalty cost on ITC reversals and ITC available shall not lapse on account of human error.

The following types of ITC shall be considered as not available:

Where the time limit to avail ITC on an invoice or debit note has expired u/s 16(4) of the CGST Act (earlier of 30 Sep of succeeding year or date of filing an annual return, whichever is earlier).
The state of supplier and place of supply is the same, whereas the recipient is located in another state.

Pros & Cons Of GSTR 2B

The pros and cons of GSTR 2B return are enumerated below: –
Pros

Reduces errors
Saves time and efforts in collating ITC related data
Aids in ITC reconciliation
Minimizes post facto penalties and interest applicable to the availment of ineligible credit.

Cons

Increase in the number of reconciliations required: With the introduction of GSTR 2B, the number of reconciliations would increase; between GSTR 2B and GSTR 2A, between GSTR 2B and ITC as per books, between GSTR 2B and ITC as per GSTR 3B.
The GSTR 2B statement is a static statement. Thus, it would not cover invoices where the supplier has filed GSTR 1 after the 11th of the month. This shall postpone the availment of ITC to next month. Though a similar restriction is provided by Rule 36(4) of CGST rules, 2017, the time limit is the due date of filing GSTR 3B i.e. 20th of next month. In the case of GSTR 2B, eligible credit will only include entries of Statement of outward supplies filed till the 11th of the following month.
The statement only takes into account two limited parameters (cited above) for non-eligible credit. Other parameters such as blocked credit as per Section 17(5) of the CGST Act, 2017 are not covered.

Key Differences Between GSTR 2A & GSTR 2B

Particulars	GSTR 2B	GSTR 2A
Nature	Static – Details uploaded by vendors after the cut-off date considered in the subsequent period.	Dynamic – Details uploaded by vendors are updated as on day without a cut-off date.
Sources	GSTR 1, GSTR 5, GSTR 6, ICEGATE system – Would not provide TDS & TCS deductions.	GSTR 1, GSTR 5, GSTR 6, GSTR 7, GSTR 8, ICEGATE system – BoE details recently updated.
Utility	Very useful in ITC reconciliations (especially Rule 36(4)), and to identify compliant/non-compliant vendors. ITC segregated on the basis of available or not available.	Simple return for viewing purpose only; entire tax credit available at one place
Reversal of ITC	Does not contain these details	Contains details of ITC required to be reversed in specified cases