In the 50 GST Council Meeting held on 11th July 2023, a new mechanism to deal with ITC mismatches between form GSTR-2B and form GSTR-3B was recommended. Accordingly, CGST Rule 88D was notified on 4th August 2023 vide CGST notification 38/2023 to allow GST system to send automatic intimations to taxpayers for major ITC discrepancies between these two returns.
In the CGST Rule 88D, a mechanism is outlined for system-based notification of cases where the ITC claimed in GSTR-3B exceeds the prescribed available ITC amount in GSTR-2Bby a certain percentage or amount. Further, it was recommended to prescribe the procedure of auto-compliance on the part of the taxpayers, to explain the reasons for the difference or take remedial action regarding such differences.
The system will check the difference between ITC Availed in GSTR 3B and ITC available in GSTR 2B. If ITC availed exceeds by specified amount and percentage then such differences shall be intimated in Part A of FORM GST DRC-01C and Tax Payer have to furnish reply in Part B of FORM GST DRC-01C electronically on the common portal, and a copy of such intimation shall also be sent to his e-mail address provided at the time of registration or as amended from time to time, highlighting the said difference and directing him to—
- pay an amount equal to the excess input tax credit availed in the said FORM GSTR-3B, along with interest payable under section 50, through FORM GST DRC-03, or
- explain the reasons for the aforesaid difference in input tax credit on the common portal, within a period of seven days.
