📌 What is the Proposed Change?

Under the existing GST provisions, a buyer's Input Tax Credit (ITC) can be denied if the supplier fails to deposit the GST, even when the buyer has fulfilled all of their obligations.

Under the proposed amendment, the buyer's ITC may remain protected if the buyer:

✅ Possesses a valid tax invoice.
✅ The invoice is reflected in GSTR-2B.
✅ Has made payment, including GST, through banking channels or other prescribed modes.

💡 In such cases, instead of reversing the buyer's ITC, the tax authorities may recover the unpaid tax directly from the defaulting supplier.

⭐ Why is This Important?

This proposal could provide several benefits to businesses:

🛡️ Protect genuine and compliant taxpayers.
⚖️ Reduce unnecessary litigation and disputes.
📈 Improve the ease of doing business.
🎯 Ensure recovery proceedings are initiated against the actual defaulter instead of honest purchasers.
🤝 Increase confidence in the GST credit mechanism.

📢 Current Status

⚠️ Please Note: This is not yet the law.

The proposal has been cleared by the GST Law Committee and is currently awaiting approval by the GST Council.

It will become effective only after the necessary legal amendments are enacted and an official Government notification is issued.

👉 Until then, businesses should continue to comply with the existing GST provisions and ensure proper vendor due diligence.

💼 Need Expert GST Advice?

At Neha K Arora & Co., we help businesses with:

✔️ GST Compliance
✔️ GST Audits
✔️ Input Tax Credit (ITC) Matters
✔️ GST Registration & Return Filing
✔️ GST Notices & Litigation Support
✔️ Tax Advisory & Consultancy

📞 Contact Us: +91 97208 87776

⚖️ Disclaimer

This article is intended for informational purposes only and is based on the latest reported proposal. It should not be construed as legal or professional advice. The proposed amendment is subject to approval by the GST Council and the issuance of an official Government notification before becoming effective.