{"id":22013,"date":"2022-02-21T15:04:32","date_gmt":"2022-02-21T09:34:32","guid":{"rendered":"https:\/\/carajput.com\/blog\/?p=22013"},"modified":"2022-09-19T19:27:50","modified_gmt":"2022-09-19T13:57:50","slug":"gst-changes-on-itc-will-impact-company-cash-flow","status":"publish","type":"post","link":"https:\/\/carajput.com\/blog\/gst-changes-on-itc-will-impact-company-cash-flow\/","title":{"rendered":"GST Changes on\u00a0ITC will Impact Company Cash Flow"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_58 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Page Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69d6f401ecdfc\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #000000;color:#000000\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #000000;color:#000000\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69d6f401ecdfc\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/carajput.com\/blog\/gst-changes-on-itc-will-impact-company-cash-flow\/#GST_Changes_on_ITC_will_Impact_Company_Cash_Flow\" title=\"GST Changes on\u00a0ITC will Impact Company Cash Flow\">GST Changes on\u00a0ITC will Impact Company Cash Flow<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/carajput.com\/blog\/gst-changes-on-itc-will-impact-company-cash-flow\/#Consequences_For_Taxpayers\" title=\"Consequences For Taxpayers\">Consequences For Taxpayers<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/carajput.com\/blog\/gst-changes-on-itc-will-impact-company-cash-flow\/#Power_cut_may_lead_to_ITC_cut\" title=\"Power cut may lead to ITC cut\">Power cut may lead to ITC cut<\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/carajput.com\/blog\/gst-changes-on-itc-will-impact-company-cash-flow\/#If_the_supplier_is_discovered_later_to_be_a_fake_ITC_cannot_be_denied_to_the_buyer_for_a_genuine_transaction_The_High_Court\" title=\"If the supplier is discovered later to be a fake, ITC cannot be denied to the buyer for a genuine transaction: The High Court\">If the supplier is discovered later to be a fake, ITC cannot be denied to the buyer for a genuine transaction: The High Court<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-22015\" src=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/02\/ITC..jpg\" alt=\"ITC.\" width=\"1280\" height=\"637\" srcset=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/02\/ITC..jpg 1280w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/02\/ITC.-300x149.jpg 300w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/02\/ITC.-1024x510.jpg 1024w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/02\/ITC.-768x382.jpg 768w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/02\/ITC.-800x398.jpg 800w\" sizes=\"(max-width: 1280px) 100vw, 1280px\" \/><\/p>\n<h2><span class=\"ez-toc-section\" id=\"GST_Changes_on_ITC_will_Impact_Company_Cash_Flow\"><\/span><span style=\"color: #000080;\"><strong>GST <\/strong><\/span><span style=\"color: #000080;\"><strong>Changes on\u00a0<\/strong><\/span><span style=\"color: #000080;\"><strong>ITC will Impact Company Cash Flow<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ul>\n<li>With the implementation of recent revisions to the law, matching of ITC under the GST Tax became more complicated and costly for taxpayers on Jan. 1. U\/s 16 of the CGST Act, 2017,<\/li>\n<li>A critical adjustment was made, requiring the supplier to file a return and communicate that filing to the recipient in order to receive credit. While this may appear to be a straightforward task, in the lack of a proper credit-matching feature on the GST site, the recipient taxpayer has been forced to go through nightmares in order to complete the matching process flawlessly.<\/li>\n<li>The new indirect tax was introduced in 2017 with the promise of automatic credit matching on the GST system, but this was never implemented.<\/li>\n<li>The revision will have a major impact on a taxpayer&#8217;s ability to obtain credit based on invoices received in its books, and it will also have a negative impact on cash flows due to the introduction of GSTR-2B under Rule 36(4) whenever a vendor fails to file a GST Return on schedule.<\/li>\n<\/ul>\n<p><strong>The Input tax credit Twist in 2022,<\/strong><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-22014\" src=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/02\/ITC-availment-.jpg\" alt=\"ITC claim\" width=\"821\" height=\"326\" srcset=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/02\/ITC-availment-.jpg 821w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/02\/ITC-availment--300x119.jpg 300w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/02\/ITC-availment--768x305.jpg 768w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/02\/ITC-availment--800x318.jpg 800w\" sizes=\"(max-width: 821px) 100vw, 821px\" \/><\/p>\n<ul>\n<li>A change to Section 16 of the CGST Act took with effect on January 1. That change offers Rule 36(4) legislative support, putting an end to the contention that it is unconstitutional. It also specifies which Form should be used for the matching exercise (GSTR-2B or GSTR-2A).<\/li>\n<li>The <span style=\"color: #0000ff;\"><a style=\"color: #0000ff;\" href=\"https:\/\/carajput.com\/gst\/gst-consultancy.php\">GST law<\/a><\/span> grants GST Tax authorities a powerful mechanism to reject Input tax credit if the invoice is not reported by the supplier in its GSTR-1. Rule 36(4) has also been changed to allow only matched credit to be given to the receiver, with the previous provision allowing a specific amount of unmatched credit being eliminated.<\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"Consequences_For_Taxpayers\"><\/span><span style=\"color: #000080;\"><strong>Consequences For Taxpayers<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The following points should be taken into consideration:<\/p>\n<ul>\n<li>With effect from January 1, 2022, taxpayers will no longer be able to claim ITC unless their respective suppliers have submitted their returns on time [as opposed to the previous position, when either it was legally arguable or some ITC was allowed under Rule 36(4)]. GSTR-2B is a static document that is created one day after the GSTR-1 due date (i.e., 12th of every month).<\/li>\n<li>As a result, a taxpayer&#8217;s qualified credit is determined and locked on the 12th, while the actual credit availment and subsequent tax payment is due on the 20th (i.e., the due date of filing GSTR-3B). As a result, any late submission by a supplier between the 13th and the 20th of the month will not be shown in GSTR-2B to the taxpayer in that month.<\/li>\n<li>Next Steps In the meantime, how can taxpayers protect themselves from credit refusal, interest, and penalties? Clearly, taxpayers must put a priority on reconciling ITC with GSTR-2B on a monthly basis. This will not be a simple task, given the volume of data involved and the kind of errors that have been observed when performing such reconciliations.<\/li>\n<li>There is a need for substantial automation that automates such reconciliation and reduces errors. Actions such as delaying payment of GST until it appears on GSTR-2B, taking prompt action against defaulting suppliers, modifying contracts to recover GST at a later date, and maintaining a vendor rating for vendors through automation are just a few of the critical steps that taxpayers should examine.<\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"Power_cut_may_lead_to_ITC_cut\"><\/span><span style=\"color: #000080;\">Power cut may lead to ITC cut<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-22261\" src=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/02\/ITC-.jpg\" alt=\"Power cut may lead to ITC cut\" width=\"1600\" height=\"738\" srcset=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/02\/ITC-.jpg 1600w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/02\/ITC--300x138.jpg 300w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/02\/ITC--1024x472.jpg 1024w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/02\/ITC--768x354.jpg 768w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/02\/ITC--1536x708.jpg 1536w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/02\/ITC--800x369.jpg 800w\" sizes=\"(max-width: 1600px) 100vw, 1600px\" \/><\/p>\n<ul>\n<li>News these days is saturated by power failures and shortages. According to reports, there will be a lot of load shedding in the following days, possibly even during business hours. As a result, it&#8217;s possible that the <span style=\"color: #0000ff;\"><a style=\"color: #0000ff;\" href=\"https:\/\/www.caindelhiindia.com\/service\/gst-return-filing\">GST Return<\/a><\/span> Filer will be unable to file the return even though the deadline has passed.<\/li>\n<li>The customer will not receive the input tax credit if the GSTR 1 Return is not filed by the due date, which will harm your business connection and our partnership. As a result, the data from GSTR 1 must be provided immediately.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"If_the_supplier_is_discovered_later_to_be_a_fake_ITC_cannot_be_denied_to_the_buyer_for_a_genuine_transaction_The_High_Court\"><\/span><span style=\"color: #000080;\"><strong>If the supplier is discovered later to be a fake, ITC cannot be denied to the buyer for a genuine transaction: The High Court<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-22342\" src=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/02\/If-the-supplier-is-discovered-later-to-be-a-fake-ITC-cannot-be-deniy.jpg\" alt=\"If the supplier is discovered later to be a fake, ITC cannot be deniy\" width=\"1093\" height=\"562\" srcset=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/02\/If-the-supplier-is-discovered-later-to-be-a-fake-ITC-cannot-be-deniy.jpg 313w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/02\/If-the-supplier-is-discovered-later-to-be-a-fake-ITC-cannot-be-deniy-300x154.jpg 300w\" sizes=\"(max-width: 1093px) 100vw, 1093px\" \/><\/p>\n<p>The petitioner claims that the status of the supplier was valid on the Government Portal at the time of the transaction, and that the buyer cannot be penalised if the supplier&#8217;s registration is later terminated retrospectively by the GST department.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>GST Changes on\u00a0ITC will Impact Company Cash Flow With the implementation of recent revisions to the law, matching of ITC under the GST Tax became more complicated and costly for taxpayers on Jan. 1. U\/s 16 of the CGST Act, 2017, A critical adjustment was made, requiring the supplier to file a return and communicate &hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[172],"tags":[5136],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/22013"}],"collection":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/comments?post=22013"}],"version-history":[{"count":5,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/22013\/revisions"}],"predecessor-version":[{"id":23302,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/22013\/revisions\/23302"}],"wp:attachment":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/media?parent=22013"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/categories?post=22013"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/tags?post=22013"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}