Section 43A of CGST Act 2019 – An Overview of the Procedure For Furnishing Returns & Availing Input Tax Credit

Section 43A of the CGST Act, 2019 lays down the procedure for filing returns and claiming Input Tax Credit. It is an important part of the GST Regime since it has simplified the process of filing returns and availing the benefits of ITC. This has improved compliance among businesses.

In this article, we will provide a detailed understanding of Section 43A and the procedure for furnishing returns and availing ITC under the GST Regime.

What is Section 43A?

Section 43A was introduced in the Central Goods and Services Act, 2019, as a provision that outlines the procedure to file returns and claim Input Tax Credit.

Section 43A is intended to bring into effect the changes in the GST return reporting framework according to the new CGST Rules. The aim is to simplify the return filing process for taxpayers.

Section 43A lays down the procedure for two activities:

• Procedure for filing GST Returns

• Procedure for claiming Input Tax Credit

How are GST Returns being filed?

Taxpayers are presently expected to file GSTR-1 and GSTR-3B on a monthly basis. They were earlier required to file GSTR-2 and GSTR-3 as well, but these two returns have since been suspended by the Government of India.

What is the new scheme under Section 43A?

Section 43A of the CGST Act, 2019 has simplified the return filing process for taxpayers. The new scheme brings many benefits, including:

• Registered taxpayers needing to file only one monthly return

• The ability to upload invoices in real-time

• The option for suppliers to upload invoices at any time in a month before the stipulated date, and these invoices being visible to buyers.

• The ability for buyers/recipients to claim ITC based on only self-declaration, even if the supplier has not yet uploaded all the corresponding invoices.

Section 43A has brought about much needed relief for taxpayers by addressing many of the concerns and challenges faced by the industry. The simplified return filing mechanism and the ability to claim ITC through self declaration will help reduce the compliance burden of taxpayers. This will help to improve the overall efficiency of the system.

Important Points of Section 43A

Below are some key points under Section 43A

• The implementation of Section 43A of the Central Goods and Services Tax Act, 2019 brings a new set of procedures for filing GST returns, which are currently on hold. While the guidelines for these procedures are yet to be announced, it is anticipated that they will be provided in due time so that taxpayers can have a clear understanding of the process.

• The provisions of Section 43A override previous sections of the CGST Act, such as Section 16(2) on conditions for availing input tax credit, and Section 37 and 38 on details of outward and inward supplies. This section offers a provisional input tax credit to taxpayers, allowing them to claim ITC even if other conditions are not met.

• Under Section 43A, registered taxpayers will have the ability to modify, add, or delete details of inward supplies in their monthly returns. This mechanism also enables recipients to claim ITC even if the supplier does not provide the necessary information or the details are incorrect.

• The amount of ITC that can be claimed provisionally is limited to 5% (previously 10% up to December 31, 2020 and 20% prior to that) of the ITC amount based on the supplier's uploaded details. The supplier and recipient are both responsible for paying output tax and ITC if returns are not filed, and recovery procedures will be specified in the rules.

• Although Section 43A is a crucial and much-needed improvement for taxpayers and the industry, it is important to note that it is currently not in effect until the rules are notified. Nevertheless, it represents a significant step forward in simplifying and easing the process of filing returns and availing ITC under GST.

Conclusion

The new GST Return Scheme under Section 43A represents a notable advancement in the simplicity of the return filing process as well as the process to claim ITC. It will aid ease of doing business and help to ensure compliance. It should help the Indian Economy grow further in coming years.

However, in the absence of notifying Section 43A, new practices have been introduced. The current practice of return filing and claiming ITC allows taxpayers to claim the ITC amount equal to what appears in their GSTR-2B/GSTR-2A. This is as per the provisions of Section 16(2)(aa) of the CGST Act which was brought into effect on 1st January 2022. Before that, taxpayers were allowed to claim 5% additional ITC beyond what appeared in the above GST Returns.