If Your Seller Isn’t Submitting GSTR-1, Will Your Input Tax Credit (ITC) Be Affected?

Understanding the Impact of Late GSTR-1 Submission on Input Tax Credit (ITC)

The GST Compliance Journey can be complex, and one of the crucial documents in this process is GSTR-1, which the seller needs to file. If your seller is not submitting GSTR-1 on time, it can lead to several issues, including a delay in claiming your input tax credit (ITC). This article explores the implications of late GSTR-1 submissions and how it affects your entitlement to ITC.

Understanding GSTR-1: A Recent Look

GSTR-1, or the Goods and Services Tax Return-1, is a mandatory submission for all registered goods and services tax (GST) returns in India. It requires sellers to furnish details about their sales and other transactions during the specified period. While GSTR-2A records the details of GST transactions between you (the recipient) and other taxpayers, GSTR-2B contains details relevant only to the supplier. If your seller (the seller) fails to file GSTR-1, it can significantly impact your ability to claim input tax credit (ITC).

ITC in the Absence of GSTR-1

When your seller fails to file GSTR-1, it has a direct impact on your ability to claim input tax credit (ITC). The input tax credit is a crucial aspect of the GST regime, allowing businesses to reclaim the tax paid on their purchases. Without GSTR-1, the input tax credit claimed in GSTR-2 from the GST portal will not be reflected in either GSTR-2A or GSTR-2B, making it difficult to claim the input tax.

It's important to note that this does not mean you will never claim ITC. In cases where sellers opt for quarterly filing of GSTR-1, the Invoice Furnishing Facility (IFF) can be used to enable the recipient to avail of ITC. However, as of January 2021, the latest amendment under Rule 364 has introduced a provision where recipients can claim 105% of eligible credit reflected in GSTR-2 from January 2021.

What to Do If Your Seller Isn’t Submitting GSTR-1

Since GSTR-1 is a critical document for claiming input tax credit (ITC), it is imperative to take prompt action if your seller is not submitting the return. Here are some steps you can take:

Inform Your Seller: The most immediate and effective step is to communicate with your seller and request them to submit GSTR-1. This can be done informally or formally, depending on your relationship with them. Follow Up: Persistent reminders may be necessary. If you don't receive confirmation that GSTR-1 has been filed promptly, you should follow up at regular intervals. Contact GST Authorities: If the seller still fails to submit GSTR-1, you may need to flag this issue with the GST authorities. You can raise a complaint in their online portal or through the GST Helpline.

Conclusion

Compliance with the GST regime is vital to ensure the smooth flow of input tax credits (ITC) in your business. Failing to submit GSTR-1 on time can impact your ability to claim these credits. However, taking the necessary steps, including timely communication with your seller and indirect support from the authorities, can help mitigate these issues.

Understanding the nuances of GSTR-1 and the provisions for input tax credit (ITC) is crucial for any business operating under the GST regime. Stay informed and stay compliant to ensure uninterrupted operations and financial benefits.

Keywords: GSTR-1, Input Tax Credit, GST