From Jan 1, 2022, a GST rule is changing. The move will help curb the menace of fake billing whereby sellers would show higher sales in GSTR-1 to enable purchasers to claim an input tax credit (ITC), but report suppressed sales in GSTR-3B to lower GST liability.

What’s changing?

-Come January 1, GST officers can directly initiate recovery action against errant businesses that show higher sales in monthly return GSTR-1 but under-report it while tax payment in GSTR-3B.

-For businesses now, it is imperative that GSTR -3B and GSTR-1 should match with each other, and no differences should be permitted in the same irrespective of the reasons, as per a PTI report.

Old one?

-Under the goods and services tax law, so far, show cause notices were first issued, and then recovery process was initiated in such cases of mismatch in GSTR-1 and GSTR-3B.

Why this change?

-The government had brought in this change as part of the Finance Act, passed by Parliament earlier this year. 

New provision under GST law

-The Central Board of Indirect Taxes and Customs (CBIC) on December 21 notified January 1, 2022, as the date on which this provision under GST law would come into effect.

-Through the Finance Act, the government inserted an explanation in sub-Section(12) of Section 75 of CGST Act, to clarify “self-assessed tax” shall include the tax payable in respect of outward supplies furnished in GSTR 1 but not included in the return furnished in GSTR-3B, the PTI report added.

Section 75 of GST Act

-Section 75 of GST Act states where there is any self-assessed tax, then it can be recovered without issuing show cause notice and the recovery proceedings under Section 79 can be directly invoked.

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