Section 43 of CGST Act 2017-Matching Reversal and Reclaim of Reduction in Output Tax Liability

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(1) Matching of Credit Note with the corresponding Reduction in the Claim for Input Tax Credit [Section 43(1)] :

The details of every credit note relating to outward supply furnished by a registered person (i.e. the supplier) for a tax period shall in such manner and within such time as may be prescribed, be matched—

  1. with the corresponding reduction in the claim for input tax credit by the corresponding registered person (i.e. the recipient) in his valid return for the same tax period or any subsequent tax period, and
  2. for duplication of claims for reduction in output tax liability.

(2) Matched Claim of Reduction of Output Tax Liability with Reduction in the Claim of ITC to be accepted [Section 43(2)] :

The claim for reduction in output tax liability by the supplier that matches with the corresponding reduction in the claim for input tax credit by the recipient shall be finally accepted and communicated, in such manner as may be prescribed, to the supplier.

(3) Discrepancy in Matching of the Claim to be communicated [Section 43(3)] :

Where the reduction of output tax liability in respect of outward supplies exceeds the corresponding reduction in the claim for input tax credit or the corresponding credit note is not declared by the recipient in his valid returns, the discrepancy shall be communicated to both such persons in such manner as may be prescribed.

The amount in respect of which any discrepancy is communicated under section 43(3) and which is not rectified by the recipient in his valid return for the month in which discrepancy is communicated shall be added to the output tax liability of the supplier, in such manner as may be prescribed, in his return for the month succeeding the month in which the discrepancy is communicated. [Section 43(5)]

The supplier shall be eligible to reduce, from his output tax liability, the amount added under section 43(5) if the recipient declares the details of the credit note in his valid return within the time specified in section 39(9). [Section 43(7)]

(4) Communication of Duplication of Claims for Reduction in Output Tax Liability [Section 43(4)]

The duplication of claims for reduction in output tax liability shall be communicated to the supplier in such manner as may be prescribed.

The amount in respect of any reduction in output tax liability that is found to be on account of duplication of claims shall be added to the output tax liability of the supplier in his return for the month in which such duplication is communicated. [Section 43(6)]

(5) Interest if there is any addition in the Output Tax Liability under Section 43(5) or (6) [Section 43(8)] :

A supplier in whose output tax liability any amount has been added under section 43(5) or section 43(6), shall be liable to pay interest at the rate specified under section 50(1) (i.e. 18% p.a.) in respect of the amount so added from the date of such claim for reduction in the output tax liability till the corresponding additions are made under the said sub-sections.

(6) Refund of Interest if Reduction in Output Tax Liability is accepted under section 43(7) [Section 43(9)]:

Where any reduction in output tax liability is accepted under section 43(7), the interest paid under section 43(8) shall be refunded to the supplier 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 ease shall not exceed the amount of interest paid by the recipient.

(7) Reduction of Output Tax Liability in contravention of the Provisions of section 43(7) [Section 43(10)] :

The amount reduced from output tax liability in contravention of the provisions of section 43(7) shall be added to the output tax liability of the supplier in his return for the month in which such contravention takes place and such supplier shall be liable to pay interest on the amount so added at the rate specified in section 50(3) (i.e. 24% p.a.).

(8)Utilisation of Input Tax Credit (ITC) [Section 49]

(1) Input Tax Credit (ITC) be Credited to Electronic Credit Ledger [Section 49(2)] :

The input tax credit as self- assessed in the return of a registered person shall be credited to his electronic credit ledger, in accordance with section 41. to be maintained in such manner as may be prescribed.

(2) Manner of Utilization of Input Tax Credit [Section 49(5)] :

The following will be the order in which the input tax credit available in the electronic credit ledger shall be utilized for tax payment:

Input tax credit on account of IGSTInput tax credit on account of CGSTInput tax credit on account of SGST / UTGST
First for payment of IGSTFirst for payment of CGSTFirst for payment of SGST/UTHST
Then for payment of CGSTThen for payment of IGSTThen for payment of IGST
And then if balance is there, for payment of SGST or UTGSTIn case there is further balance it shall not be utilized for payment of
SGST / UTGST
In case there is further balance if shall not be utilized for payment of
CGST

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