Section 42 of CGST Act, 2017 Matching, reversal and reclaim of input tax credit

 

Matching, reversal and reclaim of input tax credit, Sec 42 of CGST Act, 2017

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The below post explains about Matching, reversal and reclaim of input tax credit under section 42 of CGST Act,2017.

Section 42 of CGST Act, 2017 explains Matching, reversal and reclaim of input tax credit as below: (The amendments if any will also be updated here soon).

The extract of Section 42 of CGST Act,2017 quoted below:

42  Matching, reversal and reclaim of input tax credit

42. (1) The details of every inward supply furnished by a registered person (hereafter

in this section referred to as the “recipient”) for a tax period shall, in such manner and within

such time as may be prescribed, be matched––

Section 42 of CGST Act, 2017 Matching, reversal and reclaim of input tax credit(a) with the corresponding details of outward supply furnished by the

corresponding registered person (hereafter in this section referred to as the “supplier”)

in his valid return for the same tax period or any preceding tax period;

(b) with the integrated goods and services tax paid under section 3 of the Customs

Tariff Act, 1975 in respect of goods imported by him; and

(c) for duplication of claims of input tax credit.

(2) The claim of input tax credit in respect of invoices or debit notes relating to inward

supply that match with the details of corresponding outward supply or with the integrated

goods and services tax paid under section 3 of the Customs Tariff Act, 1975 in respect of

goods imported by him shall be finally accepted and such acceptance shall be communicated,

in such manner as may be prescribed, to the recipient.

(3) Where the input tax credit claimed by a recipient in respect of an inward supply is

in excess of the tax declared by the supplier for the same supply or the outward supply is not

declared by the supplier in his valid returns, the discrepancy shall be communicated to both

such persons in such manner as may be prescribed.

(4) The duplication of claims of input tax credit shall be communicated to the recipient

in such manner as may be prescribed.

(5) The amount in respect of which any discrepancy is communicated under subsection

(3) and which is not rectified by the supplier in his valid return for the month in which

discrepancy is communicated shall be added to the output tax liability of the recipient, in

such manner as may be prescribed, in his return for the month succeeding the month in

which the discrepancy is communicated.

(6) The amount claimed as input tax credit that is found to be in excess on account of

duplication of claims shall be added to the output tax liability of the recipient in his return for

the month in which the duplication is communicated.

(7) The recipient shall be eligible to reduce, from his output tax liability, the amount

added under sub-section (5), if the supplier declares the details of the invoice or debit note

in his valid return within the time specified in sub-section (9) of section 39.

(8) A recipient in whose output tax liability any amount has been added under subsection

(5) or sub-section (6), shall be liable to pay interest at the rate specified under subsection

(1) of section 50 on the amount so added from the date of availing of credit till the

corresponding additions are made under the said sub-sections.

(9) Where any reduction in output tax liability is accepted under sub-section (7), the

interest paid under sub-section (8) shall be refunded to the recipient by crediting the amount

in the corresponding head of his electronic cash ledger in such manner as may be prescribed:
Provided that the amount of interest to be credited in any case shall not exceed the

amount of interest paid by the supplier.

(10) The amount reduced from the output tax liability in contravention of the

provisions of sub-section (7) shall be added to the output tax liability of the recipient in his

return for the month in which such contravention takes place and such recipient shall be

liable to pay interest on the amount so added at the rate specified in sub-section (3) of

section 50.

The above information clarifies about Matching, reversal and reclaim of input tax credit under section 42 of CGST Act,2017.  

If you have any comments about Section 42 of CGST Act, 2017 explaining Matching, reversal and reclaim of input tax credit, share below your thoughts:

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