Section 38 of CGST Act, 2017 : Section 38: Communication Of Details Of Inward Supplies And Input Tax Credit

Explanation using Example

Imagine a business owner, Mr. A, who runs a garment manufacturing company. Mr. A is registered under the GST regime. At the end of each month, he is required to furnish details of all the sales (outward supplies) he has made to various retailers and wholesalers. This information is submitted to the GST portal under Section 37(1) of the CGST Act, 2017.

Now, one of Mr. A's customers, Mr. B, who owns a retail clothing store and is also registered under GST, is entitled to claim input tax credit for the goods he has purchased from Mr. A. To facilitate this, the GST system automatically generates a statement for Mr. B, which is made available electronically. This statement, as per Section 38 of the CGST Act, includes:

• Details of the garments Mr. B has purchased from Mr. A (inward supplies) on which Mr. B can avail input tax credit.
• Information on any purchases that Mr. B made from Mr. A, which are not eligible for input tax credit, perhaps due to Mr. A's default in tax payment or other prescribed conditions.

This system ensures that Mr. B has all the necessary information to accurately claim his input tax credit and comply with GST regulations.