If you are a small or medium-sized business owner in India, you may have heard about GSTR 3B and GSTR 2B. While these two concepts may seem confusing at edit businessesfirst they are actually critical for businesses to understand to ensure they comply with GST regulations.
GSTR 3B is a monthly return that businesses need to file to report their summary of sales and purchases, the amount of GST paid, and the amount of input tax credit claimed. This return is used to calculate the amount of GST that needs to be paid by the business. GSTR 3B is due by the 20th of each month.
GSTR 2B is an auto-drafted input tax credit (ITC) statement that is generated for each GSTIN on the 12th of each month. This statement is generated based on the details of outward supplies furnished by the suppliers in their GSTR 1 and the details of the inward supplies furnished by the recipient in their GSTR 3B. GSTR 2B contains details of ITC available and ineligible ITC for the recipient.
So, what is the link between GSTR 3B and GSTR 2B? The answer lies in ITC. ITC is the tax paid on purchases made by a business that can be used to reduce the amount of GST payable. In other words, ITC is a credit that businesses can claim to reduce their tax burden. However, a business can only claim ITC if the supplier has correctly reported the supplies made to the business in their GSTR 1 and the recipient has correctly reported the inward supplies in their GSTR 3B.
This is where GSTR 2B comes in. When a supplier files their GSTR 1, the details of the outward supplies made to each recipient are captured. This information is then used to generate the auto-drafted GSTR 2B for the recipient. The recipient can use the information in GSTR 2B to ensure that the supplies made to them have been correctly reported by the supplier. If there are any discrepancies, the recipient can take it up with the supplier and get it rectified.
Now comes the most critical part for businesses to remember. As per the latest notification by the government, businesses can claim ITC only if the details of the inward supplies furnished by the recipient in their GSTR 3B match with the details in the auto-drafted GSTR 2B. This means that if the supplier has not correctly reported the supplies made to the recipient in their GSTR 1, the recipient cannot claim ITC on that supply in their GSTR 3B.
This notification has come as a significant relief to the government, which has been struggling to control GST fraud. By linking the ITC claim to the auto-drafted GSTR 2B, the government has ensured that businesses cannot claim ITC on supplies that have not been correctly reported. This will reduce GST fraud and help the government achieve its revenue targets.
GSTR 3B and GSTR 2B are critical for businesses to understand to ensure they comply with GST regulations. The link between GSTR 3B and GSTR 2B is ITC, cr can claim to reduce their tax burden. However, businesses can claim ITC only if the details of the inward supplies furnished by the recipient in their GSTR 3B match with the details in the auto-drafted GSTR 2B. This notification by the government has come as a significant relief to the government, which has been struggling to control GST fraud.
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