Fixing input tax credit: Get ready for new GST return filing system in 2019

Many companies are exploring to change their vendor payment process by linking it with their GST compliance

One of the fundamental principles of goods and services tax (GST) was the concept of ‘self-policing’, wherein the matching concept for claiming input tax credit was introduced. The matching concept effectively allows a buyer to claim input tax credit only when his vendor is compliant in terms of filing GST returns and paying taxes to the government.  This was a departure from the earlier laws, barring VAT legislation in a few states.

The reconciliation of input tax credits was initially envisaged to happen online on the GST Network (GSTN) portal, wherein a buyer was supposed to take action to accept or