GST: Some Interesting Expenses which have GST ITC eligibility but are unknowingly neglected in Accounting & GST returns thereof
There are some expenses of a going concern GST registered Business which are unknowingly neglected while accounting sales, purchase & expenditure thereof. These are small expenses but can act as good accounting practice to avail proper benefits in Books and good reconciliation with GSTR 2A-2B.
1.Debit Note for Quality Difference
Situation- Suppose you have supplied the material to your customer and deposited the GST due on the sale. Whereas your customer has issued Debit Note to you for quality difference, which is not in your knowledge till date.
Probe-Such discrepancies will also come out when you will reconcile the GSTR-2A with your books of accounts.
Solution-If there is such instance, you will be able to take GST ITC on the basis of Debit Note of the party.
2. Bank Charges like Neft & RTGS charges, Processing Fees & Unit Inspection Charges
Situation- During the year different banks debit different type of bank charges plus GST to our Current account as well as to our Cash Credit Account, but they do not provide us any kind of voucher for claiming GST ITC.
Probe-You can take credit of the GST charged/debited by banks to our accounts simply on the basis of bank statements provided by banks.
Solution-At this time GST entries related to banks are visible in the GSTR-2A, since most of the banks have started filing GST returns.
3. Telephone/Mobile Bills, Internet Connectivity Charges, Postage/Parcel/Courier Charges, etc.
Situation- Sometimes these type of little entries are missed by the accountant, because payments for these expenses are often given in cash by the cashier and bills/documents do not reach to the accountant.
Probe-If in these bills are in the name of the business house and address and place of business is mentioned along with GST number, only then you can claim the input tax credit.
Solution-When you will check GSTR-2A, you will find such entries which will be still un-claimed in your books of accounts because small expenses are always not accounted properly.
4.Insurance of vehicles, Rent paid to Electricity Board, Travelling expenses of employees, Printing and stationery expenses, etc.
Situation- whether it is electricity meter rent, money spend on office work based travelling of employees, insurance charges directly expensed out for business vehicles, etc.
Probe-If in these bills are in the name of the business house and address and place of business is mentioned along with GST number, only then you can claim the input tax credit.
Solution-When you will check GSTR-2A, you will find such entries which will be still un-claimed in your books of accounts because small expenses are always not accounted properly.
5.Office rent paid
Situation- ITC can be claimed on office rent paid if you are a registered dealer and the person to whom rent is paid is also registered under GST. Further a proper GST invoice for the same is to be acquired.
Probe-There are instances found when rent is paid in inconsistent interval and the bills are neglected to be included/claimed in GST on time.
Solution-Check your Rent Invoices(specially at commercial establishments) and GSTR-2A.
6.Drinking water made available to employees
Situation- Drinking water not being a beverage is eligible for ITC claim. Further in accordance to CGST Amendment Act 2018 section 17(5)(b) states that an employer is entitled to claim ITC on goods/ services which it is statutorily obligated to provide to its employees.
Probe-Thus since drinking water falls under the ambit of statutory obligation on the part of the employer to provide to the employees ,the same is eligible for ITC claim.
Solution-Claim with reconciliation to your GSTR 2A.
7. Purchases of Air Conditioner, Television set, Refrigerators and even on Office Furniture.
Situation- When these assets are used for Office purpose and in furtherance of Business.
Probe-Next time make the purchase with disclosure of GSTIN(even many times your dealer itself asks), the amount can be significant one for small businesses.
Solution-Claim with available invoice or in reconciliation to your GSTR 2A.
These expenses seems small but can act as catalyst for knowing actual Input Service Purchases, Capital Goods Purchases, etc. and will be helpful for GST ITC reconciliation.
Also, it will be better to disclose the same into proper accounting heads so as to claim accurate depreciation, write off actual amount of expenses and frame better financials in long run.
Disclaimer: Entire content of the post is review of prevailing provisions of law, based on personal experience of author and as per information existing at the time of publishing of this post. This is just for the general information, kind attention is drawn to recent amendments & notification thereby.
