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Sunday, May 15, 2022

ITC Reversal for Credit Notes reflected in GSTR-2A

ITC Reversal for Credit Notes reflected in GSTR-2A

If the supplier of taxpayer has issued a “GST Credit Note” as per section 34 of CGST Act within prescribed time limit (not later than September following the end of the financial year in which such supply was made, or the date of furnishing of the relevant annual return, whichever is earlier) then ITC has to be reversed by the taxpayer provided he availed the credit for original invoice for which Credit Note is issued.

Relevant Section: Section 34 of CGST Act 2017

Relevant Section: Section 43 of CGST Act 2017

Steps to calculate ITC reversal liability

  1. Download GSTR-2A (CDN & CDNA) from GST Portal.
  2. GSTR-2A (CDN & CDNA) contains credit notes and debit notes.
  3. Filter only credit notes from the sheet.
  4. Now, these entries for credit notes also contain original invoice no and invoice date etc. Match this data with ITC Taken data using vlookup or for more accuracy convert it to required format and use GST Doctor ITC Matching Software.
  5. Now if taxpayer has taken ITC for some invoice and a credit note has also been issued, the taxpayer needs to reverse the ITC since taxpayer has reduced his liability.

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