ITC Full Form, Mismatch, Reversal, and Reclaim under GST

ITC matching, reversal, and reclaim are one of the major aspects under GST as it helps the taxpayer to claim accurate ITC without any discrepancy. So in this blog, we will discuss ITC mismatch, reversal, and reclaim in detail. 

What Is ITC? 

The full form of ITC is Input Tax Credit that can be used to reduce the output tax liability. For example, if you are a manufacturer you paid tax on input INR 500 and your output tax liability is INR 700. In this case, you can claim an Input Tax Credit of INR 500 and pay only INR 200 (700-500) as tax. 

ITC Mismatch under GST 

One of the major issues that most taxpayers face is the unavailability of Input Tax Credit (ITC). So, here are some of the situations that can cause ITC mismatch under GST: 

1. A mismatch in the credit amounts furnished in GSTR-3B and GSTR-2A. 

2. Difference between GSTR-1 and GSTR-3B. 

3. A mismatch between provisional credit and actual input tax credit (ITC). 

Input Tax Credit (ITC) Reversal and Rectification 

Any mismatch in GST returns can be easily rectified in the following ways: 

1. The excess claim of Input Tax Credit (ITC) 

If there is any mismatch in the ITC claimed and the actual ITC declared in the GST return of the supplier, then in that case both supplier and recipient will get notified about the same. The supplier will then need to look after the mismatch in that particular GST Return. In case if he/she fails to do so, the excess amount of Input Tax Credit (ITC) claim will be added to the output tax liability of the recipient in the subsequent month. 

2. The duplicity of Input Tax Credit (ITC) Claim 

The recipient will have to face the consequences if there is any duplicity of the ITC claim. In this case, the recipient will get notified about the duplicity of the ITC claimed and he/she then needs to settle or rectify it. If he/she fails to do so then it will be added to the output tax liability of the recipient in the month when the duplicity of ITC was notified. 

In addition to this, the recipient will have to pay interest 18% on such amount for the given period 

Input Tax Credit (ITC) Reclaim 

ITC reclaim means claiming the ITC that was reversed due to a mismatch in the ITC. However, there are two scenarios when a supplier can reclaim the ITC. 

1. If he declares the details of e-invoice or debit notes in the GST Returns for the period in which he noticed the ITC mismatch, or 

2. When the GST officer notifies ITC mismatch to the supplier. 

Any interest paid due to any ITC mismatch will be refunded to the recipient’s e-Cash Ledger in case of ITC reclaim. Howsoever, it shall be noted that in case of ITC mismatch due to duplicity cannot be reclaimed. 

How Can GSTrobo® Help You? 

GSTrobo® a division of Binary Semantics Ltd is one of the leading ASP- GSP who provides industry-leading GST compliance software such as GST, e-way bill, and e-invoicing software. These solutions not only automates most of your GST compliance but also helps you to claim 100% accurate Input Tax Credit (ITC).