ITC mismatches: Dealing with GSTR-2B vs books differences

GSTR-2B is an auto-drafted ITC statement which is generated for every normal taxpayer on the basis of the information furnished by his suppliers in their respective GSTR-1/IFF, GSTR-5 (non-resident taxable person) and GSTR-6 (input service distributor). 

The statement indicates availability and non-availability of input tax credit to the taxpayer against each document filed by his suppliers.

Legal framework of GSTR-2B

Section 16(2)(aa) of CGST Act, 2017 specifies that the details of the invoice or debit note referred to in clause (a) has been furnished by the supplier in the statement of outward supplies, and such details have been communicated to the recipient of such invoice or debit note in the manner specified under section 37.

Further, as per Rule 36(4) of CGST Rules, 2017 no input tax credit shall be availed by a registered person in respect of invoices or Debit notes the details of which are required to be furnished under sub-section (1) of section 37 unless,-

1. the details of such invoices or Debit notes have been furnished by the supplier in the statement of outward supplies in FORM GSTR-1 or using the invoice furnishing facility; and

2. the details of Input tax credit in respect of such invoices or Debit notes have been communicated to the Registered person in FORM GSTR-2B under sub-rule (7) of rule 60.

The revised CGST Rule 36(4) had implemented from 1st January 2022. 

In view of the above, buyer can only claim amounts of ITC appearing in GSTR-2B without any additional or Provisional claims.

If ITC is not reflecting in GSTR-2B, ITC cannot be claimed.

Common Types of ITC Mismatches Between GSTR-2B and Books- Most frequent reason for ITC disputes are as follows-

A. Errors from Your Supplier’s End- Invoices in Books but Not in GSTR-2B- Since GSTR-2B is entirely dependent on supplier data, any mistake they make directly impacts ability to claim credit, such as-

• Supplier filed GSTR-1 late or incorrectly.

• Supplier uploaded invoice in the wrong period.

• Supplier mentioned wrong GSTIN.

• Supplier failed to issue/upload invoice.

• If your supplier mistakenly reports your B2B (Business-to-Business) invoice as a B2C (Business-to-Consumer) transaction, the invoice will not appear in your GSTR-2B at all.

• Mistakes in the invoice number, invoice date, taxable value, or the tax amounts (CGST, SGST, IGST) are common culprits that lead to mismatches when you reconcile your books with the portal data.

• HSN / Invoice Number / Date mismatch

B. Errors from purchaser End- Invoices in GSTR-2B but Not Recorded in Books Sometimes, buyer does not have physical invoice, it is usually due to-

• Missed invoices.

• Supplier directly uploaded without sharing with the buyer.

• Duplicate upload by supplier.

• Manually entering the ITC figures in GSTR-3B without reconciling them with GSTR-2B can lead you to claim an incorrect amount, either higher or lower than what is eligible.

• Ineligible ITC showing in GSTR-2B

C. Value mismatches

• Taxable value mismatch.

• GST amount mismatch.

• Wrong tax rate applied by supplier.

• If a supplier issues a credit note to reduce the value of a previous invoice, it will reduce your eligible ITC in GSTR-2B. If you fail to account for this credit note in your GSTR-3B, you will have claimed excess ITC.

Framework to avoid GSTR-2B vs Books Differences

Monthly Reconciliation- Use reconciliation tools or Excel mapping to classify variances into:

• Missing in 2B

• Missing in books

• Value mismatches

• Ineligible ITC

Supplier Follow-up and Communication- For invoices missing in 2B:

• Share summary of missing invoices.

• Ask supplier to revise GSTR-1/IFF.

• Obtain confirmation of amendment filing.

Take Corrective Action in GSTR-3B

• If a valid invoice from your purchase register is not showing up in GSTR-2B, you must not claim its ITC in the current month’s GSTR-3B. 

• After communicating with your supplier, you must wait. You can claim this ITC in a future month’s GSTR-3B, once your supplier correctly files their return and the invoice appears in the GSTR-2B of that future month.

• If your reconciliation reveals that you have previously claimed ITC that you were not eligible for (or claimed it in error), you must reverse it. 

• This reversal should be done in your next GSTR-3B in Table 4(B)(2). Importantly, this reversal must be accompanied by the payment of applicable interest to avoid further notices and penalties.

Create a vendor compliance system

Rate suppliers by filing discipline

Hold payments for non-compliance

Inn view of the above, it can be considered that GSTR-2B is the cornerstone for ITC eligibility under GST. Businesses that proactively track and reconcile 2B each month minimize ITC blockage, prevent interest costs, and stay ahead of departmental scrutiny. A disciplined, system-driven approach to GSTR-2B ensures accurate ITC claims and strong GST compliance.

Defense for taxpayers where eligible ITC is not visible in GSTR-2B and department asking for reversal-

In the case of Suncraft energy private limited vs The Assistant Commissioner, State Tax, Ballygunge Charge and Others [2023] 63 TAXLOK.COM 001 (Calcutta) Calcutta High Court held that furnishing of outward details in Form GSTR 1 by a corresponding supplier and the facility to view the same in GSTR-2A is tax payer facilitation and does not impact the ability of the tax payers to avail input tax credit on self-assessment basis. Clarification to deal with difference in Input tax credit (ITC) availed in FORM GSTR-3B as compared to that detailed in FORM GSTR-2A for FY 2017-18 and 2018-19 is issued vide circular F. No. 183/15/2022-GST Dated: 27th December, 2022 and circular 193/05/2023-CGST, Dated : 17/07/2023 from 01.04.2019 to 31.12.2021.

It is a well-established principle of law that rules cannot override statutory provisions. Section 16(2) is part of the primary legislation (CGST Act), while Rule 36(4) is a subordinate rule. As such, when the substantive conditions under Section 16(2) are satisfied, the mere existence of Rule 36(4) cannot mandate the reversal of ITC.

In view of the above, mere non reporting of an invoice by the supplier in its GSTR-1 will not disentitle the applicant to avail the input tax credit. While Rule 36(4) aims to control and streamline the ITC claim process, it cannot override the substantive rights granted under Section 16(2) of the CGST Act. If the taxpayer meets the core conditions under Section 16(2), then mere mismatches between GSTR-2A/2B and GSTR-3B should not lead to automatic denial or reversal of ITC.

If a taxpayer meets all the conditions of Section 16(2)—having received the goods/services, possessing a valid tax invoice, ensuring tax payment by the supplier, and filing returns—then ITC is legally allowable. The mismatch between GSTR-2A/2B and GSTR-3B due to reporting delays or non-compliance by the supplier should not be a ground for denying or demanding reversal of ITC.