Section 43 of GST – Matching, reversal and reclaim of reduction in output tax liability. All Details for GST Section 43, In this section you may find all details for Matching, reversal and reclaim of reduction in output tax liability. Detailed Analysis of GST Section 43 of GST Act 2017 – Matching, reversal and reclaim of reduction in output tax liability.
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Section 43 of GST
(1) The details of every credit note relating to outward supply furnished by a registered person (hereinafter referred to in this section as the ‘supplier’) for a tax period shall, in such manner and within such time as may be prescribed, be matched –
- (a) with the corresponding reduction in the claim for input tax credit by the corresponding registered person (hereinafter referred to in this section as the ‘recipient’) in his valid return for the same tax period or any subsequent tax period, and
- (b) for duplication of claims for reduction in output tax liability
(2) The claim for reduction in output tax liability by the supplier that matches with the corresponding reduction in the claim for input tax credit by the recipient shall be finally accepted and communicated, in the manner as may be prescribed, to the supplier
(3) Where the reduction of output tax liability in respect of outward supplies exceeds the corresponding reduction in the claim for input tax credit or the corresponding credit note is not declared by the recipient in his valid returns, the discrepancy shall be communicated to both such persons in the manner as may be prescribed.
(4) The duplication of claims for reduction in output tax liability shall be communicated to the supplier in such manner as may be prescribed.
(5) The amount in respect of which any discrepancy is communicated under sub-section (3) and which is not rectified by the recipient in his valid return for the month in which discrepancy is communicated shall be added to the output tax liability of the supplier, in such manner as may be prescribed, in his return for the month succeeding the month in which the discrepancy is communicated.
(6) The amount in respect of any reduction in output tax liability that is found to be on account of duplication of claims shall be added to the output tax liability of the supplier in his return for the month in which such duplication is communicated.
(7) The supplier shall be eligible to reduce, from his output tax liability, the amount added under sub-section (5) if the recipient declares the details of the credit note in his valid return within the time specified in sub-section (9) of section 39.
(8) A supplier in whose output tax liability any amount has been added under subsection (5) or sub-section (6), shall be liable to pay interest at the rate specified under subsection (1) of section 50 in respect of the amount so added from the date of such claim for reduction in the output tax liability till the corresponding additions are made under the said sub-sections.
(9) Where any reduction in output tax liability is accepted under sub-section (7), the interest paid under sub-section (8) shall be refunded to the supplier by crediting the amount in the corresponding head of his electronic cash ledger in such manner as may be prescribed.
Provided that the amount of interest to be credited in any case shall not exceed the amount of interest paid by the recipient.
(10) The amount reduced from output tax liability in contravention of the provisions of subsection (7) shall be added to the output tax liability of the supplier in his return for the month in which such contravention takes place and such supplier shall be liable to pay interest on the amount so added at the rate specified in sub-section (3) of section 50.
Introduction
This provision relates to matching, reversal and reclaim of output tax liability due to discrepancy in the output tax reduced by the supplier by way of issuing credit note and corresponding reduction of input tax credit by the recipient. However, the provisions of section 43 shall not be applicable for the financial year 2017-18/18-19 as filing of details in inward supplies in Form GSTR 2 and furnishing a monthly return in Form GSTR 3 has been suspended for an indefinite period.
However, still matching of reduction in output tax paid by the supplier and reduction of corresponding input tax credit (If availed earlier) will be verified by revenue authorities by adopting different modes, such as, obtaining details through jurisdiction of the recipient of supply, as the Government will not be ready to forego revenue twice viz., (i) on account of reduction in output tax liability by the supplier by way of issuing credit note; and (ii) taking of input tax credit in full, without reversing credit resulting due to credit note issued by the supplier.
The said reduction in output tax liability can also be possible on account of reduction of output tax liability by the supplier which originally was due to duplication of output tax liability, the procedure as said above would mutatis and mutandis would apply
Analysis
A. Issuance of Credit note for reduction in output tax liability:
Where the output tax is reduced by the supplier by way of issuing a credit note, details of every such credit note issued is to be matched with the corresponding reduction in the credit by the recipient by availing lower input tax credit to that extent in the return furnished for such period in which details of credit note is made available to the recipient on the portal. For example: a supply invoice was originally issued at 150,000 was overstated by 50,000, to that effect a credit note is issued by the supplier (along with tax). This credit note is to be accepted by the recipient and should result in reduction of input tax credit to the said extent in the return furnished by the recipient of the supply.
B. Reduction in output tax liability due to duplication of output liability:
Similarly, where the supplier has paid taxes twice on a particular supply by issuing tax two tax invoices or otherwise and a credit note is issued to rectify the said error, the recipient of supply shall reduce his input tax credit (only if availed credit twice) in the tax period in which such credit note is issued by the supplier and the same is made available to the portal to the recipient. same shall also be accounted by the recipient.
Additional Comments:
All procedures as prescribed in analysis of section 42 supra and related rules thereto, would equally be applicable to this section and the reference to the same can be made to understand consequences, liability to pay interest and refund of interest paid earlier by way of credit to electronic credit ledger.
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