The Complete Guide to GSTR-2B: Auto-drafted ITC Statement

Introduction

GSTR-2B has emerged as one of the most crucial forms under the Goods and Services Tax (GST) regime in India. This auto-drafted input tax credit (ITC) statement holds the key to error-free GST compliance and smooth tax credit claims for businesses.

But what exactly is GSTR-2B? How can it benefit taxpayers in India? When and how did it come about? This guide will answer all such questions in detail and serve as an authoritative resource on everything you need to know about GSTR-2B.

Whether you are a business owner, accounting professional, or simply someone looking to understand GSTR-2B better, you have come to the right place. By the end of this guide, you will have clarity on:

• The meaning and concept behind GSTR-2B
• How it compares with the existing GSTR-2A form
• Its availability, format, contents, and special features
• The right way to match it with your purchase register
• Common FAQs on GSTR-2B

So let’s get right into it!

What is GSTR-2B?

GSTR-2B is essentially a static, auto-drafted ITC statement available to all GST registered taxpayers in India (except for composition dealers). It allows taxpayers to view a consolidated summary of their eligible ITC for a particular tax period, as filed by their respective suppliers.

In other words, it is a read-only statement containing information on all inward supplies received by a taxpayer based on which they can claim input tax credit. The information in GSTR-2B is fetched directly from the GSTR-1, GSTR-5, and GSTR-6 filed by a taxpayer’s suppliers.

Specifically, GSTR-2B provides information on the following:

• Invoices issued by suppliers where ITC can be availed
• Invoices issued by suppliers where ITC cannot be availed
• ITC distributed by Input Service Distributors (ISDs)
• Amendments to invoices or debit notes

One of the biggest benefits of GSTR-2B is that it remains static or constant for a tax period. This allows taxpayers to identify the exact documents based on which ITC claims can be made for that period.

For instance, if you generate GSTR-2B for the July 2023 period on 14th August 2023, the information contained in it will remain unchanged. It does not dynamically update like the existing GSTR-2A form. This enables better reconciliation of ITC claimed in monthly GSTR-3B returns.

GSTR-2B aims to bring in further transparency to the tax compliance process. It was introduced by the GSTN and made effective from August 2020, starting with the tax period of August 2020 itself.

Let us now understand the importance and benefits of GSTR-2B in detail.

Importance and Benefits of GSTR-2B

GSTR-2B serves multiple benefits for taxpayers across all industries and verticals. Some of its top merits are:

1. Enables reconciliation of ITC claims

One of the biggest advantages of GSTR-2B is that it allows taxpayers to easily reconcile their input credit claims with supplier records.

The statement provides document-level granularity of credit details which helps identify any missing invoices or amendments. You can match this data directly with your purchase register to ensure no invoice gets missed.

2. Avoids double claiming of ITC

Since GSTR-2B provides a consolidated view of eligible ITC, taxpayers can use it as a single source of truth. This prevents the same tax credit from being claimed twice accidentally.

It brings in transparency and minimizes ITC claim errors arising from multiple sources like GSTR-2A, GSTR-3B, books of accounts etc.

3. Ensures proper ITC reversals

GSTR-2B clearly flags ineligible ITC that is required to be reversed in GSTR-3B. Taxpayers can take suitable action based on the advisory for each section.

This prevents inadequate reversals and non-compliance with provisions of Section 16(2) of CGST Act.

4. Pays correct GST on reverse charge

For supplies that are subject to reverse charge, GSTR-2B indicates if the liability has been discharged. If not, taxpayers can pay the applicable GST on reverse charge basis.

This helps avoid tax loss on import of services or supplies from unregistered dealers.

5. Identifies ITC claim tables in GSTR-3B

GSTR-2B specifies the exact tables and sections under which credit for a particular invoice needs to be claimed in the GSTR-3B.

This makes return filing easier and minimizes errors in claiming input credit in wrong sections.

6. Enables error-free GST filings

By providing all the required ITC information in one place, GSTR-2B can greatly simplify GST return filing.

Taxpayers can seamlessly transfer the ITC values from GSTR-2B to GSTR-3B without sifting through voluminous data from multiple sources.

7. Cuts down reconciliation time

The clean and sorted data structure of GSTR-2B minimizes the time required for reconciling ITC claims.

Rather than manually compiling ITC details from different accounting and GST records, taxpayers can find everything at one place in GSTR-2B.

Considering these advantages, it is vital for taxpayers to access and leverage the information provided in the GSTR-2B statement.

Availability of GSTR-2B

Let us now understand when and how GSTR-2B is made available to taxpayers:

• Launch Date: GSTR-2B was introduced by GSTN from the tax period of August 2020 onwards. The first GSTR-2B statement could be generated for August 2020 period.
• Access Date: For any tax period, GSTR-2B is made available from the 14th of the next month onwards.

For example, GSTR-2B for the October 2023 tax period will be available from 14th November 2023.

• Cut-off Date: The statement considers all relevant forms filed by suppliers till the 11th or 13th of the succeeding month (based on supplier type). So GSTR-2B for October 2023 will consider GSTR-1 filed till 11th or 13th November 2023.
• Notification: Taxpayers receive an email or SMS when the GSTR-2B statement is generated for any tax period.
• Validity: The statement remains valid and unchanged for a particular tax period, until the filing due date for September month returns of next financial year or Annual Return, whichever is earlier.
• Access Mechanism: Taxpayers can access GSTR-2B directly from the GST Portal by logging in, selecting the tax period, and clicking on ‘View’ or ‘Download’.

Therefore, taxpayers must download the GSTR-2B statement each month in a timely manner. In case any invoices are missing, follow up must be done with suppliers to ensure timely reflection.

The utility also allows taxpayers to view document-wise ITC details as well as the breakup of available/ineligible input tax credit for each tax period.

Now let us understand the contents and special features of GSTR-2B in detail.

Contents and Features of GSTR-2B

GSTR-2B aims to provide maximum relevant information to taxpayers in a user-friendly manner. Some of its key contents and features are:

A) Summary Statement

The statement provides a consolidated summary of input credit available and not available, divided into various sections. This allows taxpayers to get the big picture at one glance.

B) Document-wise Details

All documents are provided at an invoice level, including their relevant amendments. Taxpayers can view and download these details easily.

C) Section-wise Advisory

GSTR-2B provides an advisory for each section clarifying the action taxpayers need to take in their respective GSTR-3B i.e. whether to claim, not claim, or reverse the given input credit.

D) Search and Filter Options

Taxpayers can search for supplier-wise data and even sort information using filters, minimizing manual efforts.

E) Cut-off Dates

Cut-off dates are clearly highlighted, depicting the last date until which forms are considered from suppliers. This provides clarity on any missing invoices.

F) Sources of Information

It clarifies the specific forms through which data is fetched i.e. GSTR-1, GSTR-5, GSTR-6. Taxpayers remain informed.

G) Detailed Format

The detailed format covers granular aspects ranging from sections where ITC can/cannot be claimed to imports data.

H) PDF and Excel Download

GSTR-2B data can be downloaded in PDF and Excel formats for offline usage and sharing.

I) Email/SMS Notifications

Taxpayers receive notifications when the GSTR-2B is generated to ensure timely action.

J) Advanced Search Option

Where records exceed 1,000, taxpayers can use the advanced search option to extract data as required.

These features make GSTR-2B extremely useful and easy to use. Taxpayers must leverage them appropriately to maximize its effectiveness.

Comparing GSTR-2A and GSTR-2B

GSTR-2A and GSTR-2B are two important statements for claiming input tax credit (ITC) under GST. While GSTR-2A has been the popular tool for ITC claims, GSTR-2B was introduced to provide greater clarity and finalize ITC claims for a tax period.

Key Differences:

Type

• GSTR-2A is a dynamic statement that gets updated frequently as suppliers file returns.
• GSTR-2B is a static statement for a tax period and does not change after generation.

Information Source

• GSTR-2A draws information from GSTR-1, GSTR-5, GSTR-6, GSTR-7, GSTR-8
• GSTR-2B uses GSTR-1, GSTR-5, GSTR-6

Availability

• GSTR-2A can be accessed anytime
• GSTR-2B is available only from 14th of the next month

Nature

• GSTR-2A details get updated and changed frequently
• GSTR-2B remains constant for a tax period

Advisories

• GSTR-2A does not specify any action to be taken
• GSTR-2B provides section-wise advisory for taking actions in GSTR-3B

Records Viewable

• GSTR-2A allows viewing 500 records max
• GSTR-2B allows viewing 1,000 records max

Updating Facility

• GSTR-2A allows suppliers to update details
• No updates allowed in GSTR-2B after statement generation

Key Takeaway:

GSTR-2B offers definitive ITC numbers and clear advisory for a tax period. Taxpayers should rely on GSTR-2B rather than GSTR-2A for finalizing their ITC claims and decisions. Using both interchangeably can lead to incorrect claims and tax liabilities.

Matching GSTR-2B and Purchase Register

Merely accessing the GSTR-2B statement is not enough. Taxpayers must thoroughly reconcile it against their own purchase registers and books of account. This helps ensure:

• No invoice is missed out that needs to be followed up with suppliers
• Ineligible ITC is reversed as prescribed
• GSTR-3B contains no errors in ITC claims or reversals

Some key principles to remember when undertaking this matching are:

• Import purchase register into Offline Tool after making it GSTR-2B format compliant
• Match documents on parameters like supplier GSTIN, tax amounts, document number etc.
• Identify reasons for mismatches like data entry errors, amendmends by supplier etc.
• Follow up urgently with suppliers if any invoices are missing in their GSTR-1
• Ensure no blocked credit gets claimed and reversals are done properly
• Double check if any amendments or debit/credit notes are incorporated
• Ascertain if GST paid under reverse charge for imports etc. is accounted for
• Do not consider GSTR-2A details if the same invoice is present in GSTR-2B
• Verify if credit is being taken only up to the allowed time limit under law

Therefore, taxpayers must do periodic reconciliation of GSTR-2B data at a line item level.

Frequently Asked Questions

Here are some common FAQs on GSTR-2B:

Q: What are the key benefits of GSTR-2B over GSTR-2A?

GSTR-2B allows taxpayers to identify the exact ITC available for a month clearly. It remains constant without day-to-day changes like 2A. Further, it provides advisory on claiming or reversing such ITC in GSTR-3B along with document-level granularity.

Q: How is GSTR-2B generated?

GSTR-2B is auto-drafted for a taxpayer based on the ITC details furnished by their suppliers in their respective GSTR-1, GSTR-5, and GSTR-6. The statement gets generated on 14th of the next month.

Q: Can taxpayers make changes to GSTR-2B on the portal?

No, GSTR-2B is a non-editable read-only statement. Taxpayers cannot make any changes to it on the portal directly. It remains constant for a tax period.

Q: What are the sources of information for GSTR-2B?

GSTR-2B gets populated using details from GSTR-1, GSTR-5, and GSTR-6 filed by a taxpayer’s suppliers. It also contains import of goods information from ICEGATE.

Q: Can credit claimed in GSTR-3B exceed the amount shown in GSTR-2B?

Legally, taxpayers cannot claim ITC in GSTR-3B that is greater than the amount specified in their respective GSTR-2B for that tax period. The onus lies on taxpayers to ensure this.

Conclusion

In summary, GSTR-2B serves as a comprehensive, definitive statement of ITC claims for taxpayers each month. By reconciling it thoroughly with their purchase registers and accounting for any reversals, taxpayers can file error-free GSTR-3B.

Some key takeaways from this guide are:

• GSTR-2B is a static, read-only statement containing detailed ITC information
• It is generated monthly based on suppliers’ returns and made available from 14th onwards
• Taxpayers must download it each month and reconcile with books of accounts
• The reconciliation must be done at an invoice-level to avoid any errors
• Advisory contained in it must be followed for claiming or reversing input credit

Using GSTR-2B smartly can go a long way in simplifying GST compliance for taxpayers. Reconciling it along with suitable follow up and communication with suppliers is vital.

Taxpayers can also explore automated reconciliation tools which can match GSTR-2B and books of account seamlessly in a few minutes. Such intelligent solutions help ensure 100% accuracy in ITC claims and minimise future tax liabilities.

With this, we come to the end of this detailed guide on mastering GSTR-2B. We hope you found it useful. Stay tuned for more insightful articles to make your GST compliance experience smooth and stress-free!