Addressing Form GST ASMT-10 Notices: Key Insights for FY 2020-21 Input Tax Credit (ITC) Reconciliations

The Goods and Services Tax (GST) framework in India prioritizes transparency, compliance, and accountability. Recently, an increase in Form GST ASMT-10 notices has been observed for discrepancies in Input Tax Credit (ITC) claims during FY 2020-21. Taxpayers are being asked to reconcile mismatches identified across returns such as GSTR-2A, GSTR-3B, GSTR-9, and GSTR-9C, often within stringent timelines.

Understanding Form GST ASMT-10
Form GST ASMT-10 is issued under Section 61 of the CGST Act, 2017, when discrepancies are detected during the scrutiny of returns. This notice provides taxpayers an opportunity to explain, clarify, or reconcile these variances, failing which further proceedings under Sections 73 or 74 of the Act may follow.
Common Causes of ITC Mismatches

For FY 2020-21, the GST department has primarily identified these mismatches:

Mismatch between GSTR-2A and GSTR-3B: GSTR-2A reflects ITC reported by suppliers, while GSTR-3B is based on the ITC claimed by the recipient. Any discrepancy often triggers scrutiny under Rule 36(4) of the CGST Rules, which restricts ITC claims to the extent matched with GSTR-2A.

Discrepancies in GSTR-9 and GSTR-9C: Annual returns and audit reports must align with the data reported in monthly/quarterly returns. Disparities raise red flags.

Overclaimed ITC or unreported liabilities: Instances where taxpayers inadvertently or otherwise claim ITC beyond the supplier’s output tax liability or fail to report outward tax liabilities. Statutory Timelines under Section 73 The GST Act specifies time limits for issuing show-cause notices (SCN) and passing orders in non-fraudulent cases under Section 73 of the CGST Act:

Issuance of SCN:
Within 2 years and 9 months from the due date for filing the annual return for the relevant financial year. Passing of Orders: Within 3 years from the same due date.

For FY 2020-21:
Annual Return Due Date: 28th February 2022 SCN Issuance Deadline: 28th November 2024 Order Issuance Deadline: 28th February 2025 Responding to Form GST ASMT-10 Receiving Form GST ASMT-10 requires prompt action. Here’s a structured approach to manage this effectively:

Reconcile ITC Claims: Compare ITC in GSTR-2A with that in GSTR-3B to identify and resolve discrepancies early.

Review Annual Returns: Ensure alignment between GSTR-9, GSTR-9C, and monthly/quarterly returns to avoid inconsistencies.

Prepare Documentation: Maintain proper invoices, reconciliation statements, and ITC records to substantiate claims.

Adhere to Timelines: Respond within the prescribed period mentioned in ASMT-10 to avoid escalations under Section 73 or Section 74.

Seek Professional Assistance: Engage GST experts or chartered accountants for detailed reconciliation and addressing complex queries. Proactive Measures to Mitigate Risk

With the SCN issuance deadline fast approaching, taxpayers should:
Regularly conduct ITC reconciliations to stay compliant. Use technology or professional services for error-free return filing and reconciliation. Remain vigilant about notices and adhere strictly to GST provisions. Conclusion Form GST ASMT-10 notices highlight the increasing emphasis on compliance under the GST regime. Taxpayers must ensure meticulous record-keeping, robust reconciliations, and timely responses to address discrepancies effectively. Taking proactive steps and consulting professionals can safeguard against liabilities and penalties while ensuring seamless compliance with GST law.

For assistance with GST compliance and notice responses, please feel free to contact