Analysis
A. Matching, reversal and reclaim envisages the following circumstances
| Situation | Remarks / Comments |
| All Transactions where Input credit details of recipient are matched for output tax as stated by supplier and recipient (including cases where amount of input tax credit claimed is less than the amount of output tax paid by supplier on a particular tax invoice) | The transaction is treated as matched. |
| Transactions where the claim of input tax credit is made more than once (i.e., Duplication of claims) | Details of such discrepancy shall be
communicated to the registered person (only recipient) in FORM GST MIS 1. |
| Transactions where the claim for input tax credit is higher than the output tax as declared by the supplier | Details of such discrepancy shall be made available to recipient in Form GST MIS-1 and to the supplier in Form GST MIS-2 — Two possibilities:
(a) If discrepancy is due to supplier’s mistake and accepts it, can correct it in GSTR 1 of that month (results in increase in output liability in the hands of supplier). (b) If discrepancy is due to recipient’s mistake and accepts it, can correct it in statement of inward supply for that month (results in However, if the same is not rectified by both of them, such amount will get added to output tax liability of such recipient and the said amount is payable along with applicable interest (section 50(1) of CGST Act, 2017). |
| Transactions where the claim for input tax credit is higher than the output tax as declared by the supplier because the supplier has not furnished a particular |
Same as above |
Illustration:
The recipient of supply has filed his return for the month of July, 2018 on 20th of August, 2018. There is mismatch in the amount of input tax credit availed and amount of tax paid by the supplier on the particular tax invoice, the discrepancy will be made available to recipient in Form GST MIS-1 and to the supplier in Form GST MIS-2 by 31st day of August 2018 through the common portal.
In this case one has to understand who has committed the error and who should rectify – whether the supplier shall make rectification in their GSTR 1 to be submitted for the month of August 2018 OR the recipient shall make rectification in Form GSTR 2 to be submitted for the said month i.e., August 2018. In such a situation, if the supplier has committed the error and corrects it in his GSTR 1 to the said extent there will be increase in his output tax , along with applicable interest. Similarly, if the error has been committed by the recipient and he corrects it in Form GSTR 2, then to the said extent there will be reduction in the amount of input tax credit available for payment of taxes.
However, if neither the supplier nor the recipient rectifies the discrepancy, then the difference amount will get added to the output tax liability of the recipient of supply in his return in FORM GSTR-3 / GSTR 3B as the case may be for the month of September 2018. The said differential amount shall be along with applicable interest.
However, if the supplier declares the invoice or debit note in any subsequent month but before the time limit prescribed, say in the month Jan 2019, the recipient of supply can reduce the relevant tax amount from the output tax liability for the month of January 2019. Further, recipient will also be eligible for refund of interest paid earlier and the said amount will get credited to electronic cash ledger under the head of interest and can be utilised for any payment towards interest in future.