New GST Rule to Ensure Fair Input Tax Credit (ITC) Claims
Here is an important update regarding the Goods and Services Tax (GST) regime as per GOI notification. The GST Council is set to introduce a new law aimed at promoting transparency and accountability in claiming Input Tax Credit (ITC). Under this upcoming regulation, businesses and individuals will be required to provide an explanation or return any excess ITC claimed that exceeds a specified threshold.
To streamline the process and ensure adherence to this rule, a dedicated law committee comprising tax officials from the Central and State governments has been formed. The committee suggests that if the difference between the ITC claimed in the GSTR-3B return and the amount reported in the generated GSTR-B exceeds 20 percent and is over Rs 25 lakh, the registered person will be liable to pay tax through the portal. Additionally, they will need to provide a valid reason for the discrepancy or return the excess ITC with interest.
The recommendations put forth by the committee will be discussed and finalized during the upcoming 50th meeting of the GST Council, scheduled for July 11. The current practice of utilizing tax paid by suppliers for settling GST liability in GSTR-3B will continue. However, businesses must be prepared to address any discrepancies and fulfill the requirements specified in the new law.
