ITC

The penalty for wrong availment of Input Tax Credit (ITC) under GST includes paying interest at 24% per annum on the wrongly availed amount, a monetary penalty equivalent to the amount of the wrong ITC, and a general penalty of Rs. 10,000 or the tax involved, whichever is higher. In severe cases involving fraud, prosecution and imprisonment ranging from 1 to 5 years can be initiated, and the taxpayer’s ITC may be blocked.

Here are the new rules for ITC claims in GST:

1. Restriction on Unmatched ITC:
   • ITC can only be claimed on invoices and debit notes that are furnished by suppliers in their GSTR-1 and reflected in the recipient’s GSTR-2B.
2. Matching ITC Claims:
   • ITC claims must match the details uploaded by suppliers in their outward supply statements to be eligible.
3. Biometric-Based Aadhaar Authentication:
   • Aadhaar authentication is required for taxpayers to avail ITC, ensuring identity verification.
4. Mandatory GSTR-1 Filing:
   • Suppliers must file GSTR-1 for recipients to claim ITC on their invoices.
5. Physical Verification:
   • Physical verification of business premises may be conducted for high-risk taxpayers before allowing ITC claims.
6. Bank Account Verification:
   • The bank account used for GST registration must be in the name of the registered person and linked with their PAN and Aadhaar.
7. E-Invoicing Requirement:
   • Businesses with turnover above a certain threshold must generate e-invoices for B2B transactions to avail ITC.
8. Use of Data Analytics:
   • Regular use of data analytics to track and identify risky ITC claims and GST registrations to prevent tax evasion.
9. Provisional ITC Limit:
   • The limit for provisional ITC (not matched with GSTR-2B) is restricted to a specific percentage of eligible ITC.
10. Restriction on E-Way Bill Generation:
    • Non-compliant taxpayers face restrictions on generating e-way bills, affecting the movement of goods and ITC claims.

• Login and Navigate to ITC-01 page.
• Declaration for claim of input tax credit under sub-section (1) of section 18.
• Preview GST ITC-01.
• Submit GST ITC-01 to freeze data.
• File GST ITC-01 with DSC/ EVC.

Yes, GST Input Tax Credit (ITC) can be refunded under certain circumstances. Here are the key scenarios where a refund of GST ITC can be claimed:

1. Zero-Rated Supplies:

   • Export of Goods or Services: If you export goods or services, you can claim a refund of the unutilized ITC.
   • Supplies to SEZ: Supplies made to a Special Economic Zone (SEZ) developer or unit are considered zero-rated. You can claim a refund of the accumulated ITC used to make these supplies.

2. Inverted Duty Structure:

   • If the tax rate on inputs is higher than the tax rate on output supplies, leading to an accumulation of ITC, you can claim a refund of the unutilized credit.

3. Finalization of Provisional Assessment:

   • If you were assessed provisionally and the final assessment results in a refund, you can claim it.

4. Deemed Exports:

   • Supplies regarded as deemed exports (as notified) are eligible for a refund of ITC.

5. Excess Balance in Electronic Cash Ledger:

   • Any excess balance in your electronic cash ledger can be claimed as a refund.