Once the ITC reconciliation ( books vs 2B) is completed, the correction process needs to be initiated. The correction needs to be done by the vendor for missing and mismatched invoices in his GSTR 1. He can do it on or before 11th November.
Some invoices appearing open in 2B have been called for from the vendor. Some invoices from the internal team. These both activities take time. Either internal team (procurement) to find an invoice at their desk if that was kept on hold for deficiency in service or quality issue in the goods received Or vendors need to supply them.
Such invoices need to be accounted in books to claim the ITC in 3B. However, the question is whether the invoices need to be accounted for in the month of October for which the 3B is due for filing on or before 20th November or those invoices can be accounted for in the month of November?
Section 16(4) of the CGST Act provides time till 30th November to claim ITC on the invoices of the last financial year. ITC can be claimed only via 3B , therefore the 3B which is filed before 30th November is the return to claim the ITC. 3B of October is due on 20th November. Hence , October month 3B is the last return for claiming itc of previous financial year. 3B needs to be carefully filed.
Since, the aforesaid section gives time till 20th November (if 3B filed late then 30th November) the accounting should also be allowed to be done in books for invoices now considered for claiming ITC by 20th November. By the time the invoices are collated for claiming itc (some vendor may respond late) the October month books must be already closed. So there is no way to go back even on the 14th November (the time when 2B is generated and available) for accounting. Hence, it is clear that ITC may be claimed in October 3B whereas the accounting can be done in November.
One view came up that the missing or mismatched invoices should already have been accounted for in the last year itself. The ITC claim may have been kept on hold and availed in the next financial year. Only those invoices which are accounted for in the last financial year are eligible to claim ITC by 20th November (30th November).
In accounting, there is a matching principle where provision for expenses of which invoices would be received in next financial year is made. This provision concept allows the buyer to make provision for invoices not received but is expected to receive in the next financial year.
However, there is no mention of this provisional entry method in books of accounts for missed invoices in GST law. As such the matching concept is for proper accounting as per Companies Act. Even under income tax act the provisions are disallowed in the computation of income tax payable.
Going by GST law to take ITC the condition for method of accounting is absent and hence the eligibility of ITC is independent of the accounting method. That is , the provision was made in the last financial year or not or the invoice is booked in October or in November, the ITC is eligible.
So, let us focus on the missed and mismatched invoices, follow up with the vendor to make them necessary correction in GSTR 1, or check internally etc and avail it.
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