GST Council may consider a modification to the GSTR-3B form for better ITC reporting

The GST Council will likely conduct its 47th meeting in June 2022. Among many items on the agenda, such as GST rate restructuring, talks are on that the GST Council will also introduce a revised GSTR-3B format.

Under the GST law, the summary tax return called the Form GSTR-3B would undergo some changes to its format to curb and combat fake Input Tax Credit (ITC) claims. It will further fasten the settlement of the genuine ITC claims. The form shall provide the gross ITC due to the taxpayer, the amount of monthly ITC claims and the net ITC remaining in the ledger. 

The GST Council’s law committee is working towards streamlining the GSTR-3B filing process to provide better clarity on the disclosure of the availability and actual ITC claims. The move to include gross tax credit claims in GSTR-3B is expected to remove any delays in the tax revenue sharing between the Centre and states.

Such reporting of the gross tax credit is to be done by banks, financial institutions, Non-Banking Financial Companies (NBFCs), public transport, educational institutions, healthcare, oil and gas companies, and manufacturing of extra neutral alcohol.

Apart from the probable GSTR-3B format changes, the GST Council may deliberate on raising the GST rate on races, casinos and online gaming from the present 18% to 28%. A group of state ministers recommended it. Further, the committee recommended a method for valuing such services for the levying such high tax. Such a mechanism for valuation of the services is decided by the Group of Ministers (GoM).

Currently, fraudulent ITC claims have been on the rise, with many fake firms being set up to issue fake invoices. Although the GSTR-2B was introduced to provide insights to the taxpayer recipients to claim only the eligible ITC, there is no mechanism to monitor that in GSTR-3B. Hence, exclusive declaration of gross ITC, ITC claimed, and net ITC is much-needed.

The taxpayers can look forward to this change in June 2022 after the GST Council and CBIC notification approval. Hence, suitable changes are needed in their compliance systems to capture such information as per the possible change in Form GSTR-3B.

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