News Analysis

A ready reckoner for filing GSTR 2

Satya Sontanam BL Research Bureau | Updated on January 08, 2018

GSTR 2, a return of inward supplies (purchases) to be filed by all the regular tax payers, is due on October 31. Here is a lowdown on the process of filing and the few things that tax payers should watch out for.

For the uninitiated, most part of the return is actually auto-populated from GSTR 1, a return for outward supplies (sales), filed by the suppliers. After filing GSTR 1 and GSTR 2, the eligible Input Tax Credit (ITC) and the tax liability of the assessee will be determined and will appear in the GSTR 3, the final return an assessee has to file for a particular month.

The first step in filing the GSTR 2 is to generate GSTR 2 summary from the GST portal. Subsequently, the invoice level inward supply information will be automatically populated. Then, the assessee has to choose from one of the four options; ‘accept’, ‘reject’, ‘modify’ or ‘pending for action’ for every invoice.

If the tax payer chooses to ‘accept’ the invoice, he or she agrees to the details furnished by the supplier. However, if it is ‘rejected’, the invoice will not form part of the assessee’s GSTR 2 and will not be eligible for the input tax credit for the amount of tax in that particular invoice.

Moreover, if the assessee finds particulars of any invoice erroneous, he can choose to ‘modify’. The supplier will receive the modifications in the form of GSTR 1A. He can also choose to either accept or reject it. If the supplier agrees, the same data will be used by the system to calculate the ITC and tax liability in the GSTR 3.

But, if the supplier does not accept the modifications, it will show as a ‘mismatch in values’, says Archit Gupta, Founder & CEO ClearTax. However, ITC will be available on the modified values on a provisional basis.

If the ITC claimed by the assessee has further proven to be incorrect, the amount claimed now will be added to the tax liability which is to be paid including interest while filing the subsequent returns.

The assessee can also keep the transaction ‘pending for action’. However, the ITC on the same invoice will not be available until it is accepted.

After the action is taken on all the invoices, if the assessee find details of few invoices are missing, due to omission or non-filing of GSTR 1 by the supplier, the assessee can add them using ‘Add missing invoice’ option available in the return.

Gupta says, “the same information will flow to the supplier in his GSTR-1A where he can choose from one of the options — accept, reject and modify. Meanwhile, the assessee will get ITC on added invoices on a provisional basis”.

After taking the necessary action on the summary of invoices, the assessee has to validate and submit the return using digital or e-signature. Upon filing the return, an Acknowledgement Reference Number (ARN) will be generated which is to be used while filing GSTR 3.

GSTR 3 will be available for filing from November 1. It is to be noted that once the action is taken and the return is submitted, there is no option to go back and redo the action.

Published on October 27, 2017

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