Matching of invoice under GST is a brilliant move to check fraud and drive more businesses to formal economy, but by taking it one step further and linking tax payment by a supplier, to the availability of input credit to the buyer, the beauty of the system completely break down.
To understand this, it is very important to know what input credit will do? One of features of GST is seamless flow of input credit across the chain (from the manufacture of goods till it is consumed) and across the country.
In this section, let’s discuss about various conditions laid down by law to avail input credit on supply of goods or services flow. All of the following condition need to be satisfied to avail input credit:-
- The dealer should be in possession of tax invoice.
- The said goods/services have been received.
- Returns (From GSTR-3) have been filled.
- The tax charged has been paid to the govt. by the supplier.
What do these conditions imply?
Once from GSTR-1 is filled by the supplier, recipient has a visibillity of the purchase through the auto populated from GSTR-2. After necessary modification, additions and acceptance in from GSTR -2 the input credit will be credited to recipient’s electronic, credit ledger on provisional basis. The additon and modification done by the recipient in form GSTR-2 will be available to supplier in from GSTR-1 for this acceptance. Input credit will be available only when the monthly returns (From GSTR-3)are filled by the supplier along with payment tax. The final acceptance of input tax credit will be communicated in from GST MIS-1.
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