Section 38 – Communication of Details of Inward Supplies and Input Tax Credit under the CGST Act, 2017

Section 38 of the Central Goods and Services Tax (CGST) Act, 2017 deals with the communication of details of inward supplies and input tax credit (ITC) to a registered recipient through the GST system.

The provision is closely connected with the supplier’s reporting of outward supplies under Section 37. Information furnished by suppliers is processed by the GST system and an auto-generated statement containing details relevant to the recipient’s input tax credit is made available electronically.

In practical GST compliance, this mechanism is closely associated with Form GSTR-2B, the auto-drafted and read-only ITC statement available to registered taxpayers. GSTR-2B is generated from information furnished by suppliers through GSTR-1, GSTR-1A and GSTR-5, information furnished by Input Service Distributors through GSTR-6, and import data received from the ICEGATE system.

Section 38 is important because it creates a system through which a recipient can see information relating to inward supplies and assess the availability of input tax credit while preparing the applicable GST return.

What is Section 38 of the CGST Act?

Section 38 is titled “Communication of details of inward supplies and input tax credit.”

Under Section 38(1), details of outward supplies furnished by registered persons under Section 37(1), along with such other supplies as may be prescribed, and an auto-generated statement containing details of input tax credit, are made available electronically to the recipients.

This information is made available in the prescribed form and manner and is subject to the conditions and restrictions prescribed under GST law.

The provision therefore connects the supplier’s outward-supply reporting with the recipient’s inward-supply and ITC information.

In simple terms:

Supplier reports supply → GST system processes the information → recipient gets electronically generated ITC-related information.

Purpose of Section 38

The main purpose of Section 38 is to provide the recipient with electronically generated information relating to inward supplies and input tax credit.

This helps taxpayers:

• Identify invoices reported by suppliers
• Check available input tax credit
• Identify credit that may not be available
• Reconcile purchase records with GST portal data
• Identify supplier reporting differences
• Prepare the ITC portion of GSTR-3B
• Monitor credit notes and amendments
• Review reverse-charge supplies
• Check import-related ITC information

The provision therefore forms an important part of the GST return and ITC ecosystem.

Section 38 and GSTR-2B

For practical purposes, one of the most important statements associated with Section 38 is Form GSTR-2B.

The GST Portal describes GSTR-2B as an auto-drafted ITC statement generated for every registered person. It is based on information furnished by suppliers in their GSTR-1, GSTR-1A and GSTR-5, ITC distributed through GSTR-6, and import information received from ICEGATE.

GSTR-2B is a read-only statement. The recipient does not file GSTR-2B.

Instead, it provides information that the taxpayer can use while determining the eligible ITC to report in GSTR-3B.

Is GSTR-2B Filed by the Taxpayer?

No.

GSTR-2B is not a return that the taxpayer files.

It is a system-generated statement made available electronically to the registered person.

The GST Portal specifically states that taxpayers do not have to file GSTR-2B because it is a read-only, static, auto-drafted ITC statement.

The taxpayer uses the information in GSTR-2B while preparing the relevant GST return and must independently determine whether the credit is legally eligible.

What Information Is Included in GSTR-2B?

The GST Portal states that GSTR-2B receives information from several sources.

These include:

• B2B invoices furnished by suppliers
• B2B debit notes
• B2B credit notes
• Amendments to relevant documents
• Documents reported through GSTR-1
• Documents reported through GSTR-1A
• Documents reported through the Invoice Furnishing Facility (IFF)
• Information furnished by non-resident taxable persons through GSTR-5
• ITC distributed by Input Service Distributors through GSTR-6
• IGST paid on imports of goods received through ICEGATE
• Certain supplies received from SEZ units or developers

The precise information appearing in a taxpayer’s GSTR-2B depends on the nature of the transactions and the data reported through the applicable systems.

Section 38(1) – Communication of ITC Information

Section 38(1) establishes the basic mechanism.

The details of outward supplies furnished under Section 37(1), along with other prescribed supplies, are made available electronically to the recipient.

An auto-generated statement containing details of input tax credit is also made available.

The statement is provided:

• Electronically
• In the prescribed form and manner
• Within the prescribed time
• Subject to prescribed conditions
• Subject to prescribed restrictions

This means Section 38 itself establishes the legal framework, while the detailed operational mechanism is implemented through the GST Rules and GST Portal.

Section 38(2) – ITC Available and ITC Not Available

Section 38(2) provides that the auto-generated statement contains two broad categories of information.

1. Inward Supplies Where ITC May Be Available

The statement contains details of inward supplies in respect of which input tax credit may be available to the recipient.

The use of the words “may be available” is important.

The appearance of an invoice in GSTR-2B does not by itself mean that the recipient can automatically claim the credit.

The taxpayer must still satisfy the applicable conditions under the CGST Act and Rules.

2. Supplies Where ITC Cannot Be Availed

The statement can also contain details of supplies in respect of which credit cannot be availed, wholly or partly, on account of specified circumstances provided under Section 38.

The statutory provision identifies certain categories of supplier-related situations and other prescribed classes for which the corresponding credit may be treated as unavailable or restricted in the system.

Why Does Section 38 Say “May Be Available”?

This is an important point for taxpayers.

GSTR-2B is a system-generated statement. It does not replace the taxpayer’s legal responsibility to determine ITC eligibility.

The GST Portal itself advises taxpayers to exercise caution and self-assess ITC because there can be circumstances where credit is not available under other legal provisions even though the system does not mark it as unavailable in GSTR-2B.

For example, an invoice appearing in GSTR-2B does not automatically override restrictions under:

• Section 16
• Section 17
• Other provisions of the CGST Act
• Relevant CGST Rules
• Applicable restrictions relating to the particular transaction

Therefore, taxpayers should not follow a simple rule of:

“If it is in GSTR-2B, claim it.”

Instead, GSTR-2B should be used as an important source of information while the taxpayer performs the required legal eligibility checks.

ITC Available in GSTR-2B

The GST Portal divides the ITC information in GSTR-2B into different sections.

The ITC Available portion includes information relating to:

• Supplies from registered persons other than reverse charge
• Supplies received from an Input Service Distributor
• Inward supplies liable to reverse charge
• Import of goods
• Relevant credit notes and amendments

These categories are reflected in the prescribed GSTR-2B structure.

ITC Not Available in GSTR-2B

GSTR-2B also contains information relating to ITC that the system identifies as unavailable in specified circumstances.

For example, the GST Portal identifies certain invoices or debit notes as not available where:

• The ITC is time-barred under Section 16(4), or
• The supplier and place of supply are in the same State while the recipient is in another State, in the circumstances specified by the GST system.

The GST Portal also makes it clear that these are not the only possible situations in which ITC may be legally unavailable. Taxpayers must independently examine other restrictions under GST law.

Supplier Reporting and Recipient ITC

Section 38 creates an important connection between the supplier’s compliance and the recipient’s ITC information.

Suppose a supplier sells goods to a registered customer.

The supplier reports the B2B invoice through the applicable GST return mechanism.

That information is processed by the GST system and can subsequently appear in the recipient’s GSTR-2B.

The recipient can then compare the system-generated information with its purchase register and other records.

This makes accurate supplier reporting important for both parties.

Example of Section 38

Suppose ABC Ltd. purchases goods worth ₹1,00,000 from XYZ Ltd.

Assume the GST charged on the transaction is ₹18,000.

XYZ Ltd. reports the B2B invoice through the applicable GST reporting mechanism.

The invoice information is subsequently reflected in ABC Ltd.’s GST system records.

ABC Ltd. can check the invoice in its GSTR-2B and compare:

• Supplier GSTIN
• Invoice number
• Invoice date
• Taxable value
• IGST
• CGST
• SGST
• Credit or debit note information, if applicable

ABC Ltd. can then determine whether the ₹18,000 ITC satisfies all applicable legal conditions before reporting eligible credit in its GST return.

Section 38 and GSTR-3B

Section 38 is closely connected with GSTR-3B because the recipient uses the information in GSTR-2B while preparing the ITC portion of GSTR-3B.

The GST Portal states that GSTR-2B should be used by taxpayers to take the appropriate input tax credit in the relevant sections of GSTR-3B.

Certain values from GSTR-2B are also used by the GST system for auto-population of relevant portions of GSTR-3B.

For example, the GST Portal provides mapping between GSTR-2B sections and relevant GSTR-3B tables for:

• ITC from registered persons
• ITC from ISD
• ITC on reverse-charge supplies
• Import of goods
• Certain ITC reversals and unavailable credit

However, auto-population does not eliminate the taxpayer’s responsibility to verify the figures.

Section 38 and Input Tax Credit Eligibility

Section 38 should be read together with the provisions governing ITC, particularly Section 16 and Section 17.

Section 38 tells the taxpayer what information is communicated through the GST system.

It does not independently create a blanket entitlement to ITC.

A taxpayer claiming ITC should consider the applicable statutory conditions, including whether:

• The recipient possesses the required tax document
• The goods or services have been received
• The transaction is connected with business as required by law
• The tax has been appropriately dealt with under GST law
• The credit is not blocked under Section 17(5)
• The credit is not otherwise restricted or time-barred
• Other applicable conditions have been satisfied

Therefore, GSTR-2B is an important compliance tool, but it should not be treated as a substitute for the CGST Act.

Section 38 and Reverse Charge

Reverse-charge transactions require special attention.

GSTR-2B contains a section for inward supplies liable to reverse charge where the relevant information has been furnished through the applicable supplier reporting mechanism.

The GST Portal explains that such supplies are reflected in the relevant portion of GSTR-2B and are to be reported for payment of tax under the reverse-charge provisions, with corresponding ITC becoming available subject to the applicable requirements.

Importantly, reverse charge does not mean that the recipient can simply claim ITC without first accounting for the applicable tax liability.

The taxpayer should follow the prescribed process for reporting and payment of reverse-charge tax before claiming the corresponding credit where legally eligible.

👉 Read More → Section 37 – Furnishing details of outward supplies

Section 38 and Input Service Distributor

Information relating to ITC distributed by an Input Service Distributor is also included in GSTR-2B.

The GST Portal states that GSTR-2B receives relevant information from the ISD’s GSTR-6.

This information can appear under the section relating to inward supplies from ISD.

The recipient should reconcile the ITC received from the ISD with the relevant ISD documentation and accounting records.

Section 38 and Imports

GSTR-2B also contains information concerning IGST paid on imports of goods.

This information is received from the ICEGATE system.

The GST Portal states that import information relating to overseas goods and supplies of goods from SEZ units or developers is included in GSTR-2B based on data received from ICEGATE. The information is updated on a near-real-time basis in the relevant system.

Therefore, import-related ITC reconciliation is not dependent solely on supplier-filed GSTR-1 data.

Section 38 and Credit Notes

Credit notes reported by suppliers can affect the recipient’s ITC.

For example, suppose a supplier originally issues an invoice containing ₹18,000 of GST and the recipient takes eligible ITC.

Later, the supplier issues a GST credit note reducing the taxable value and tax.

The corresponding credit-note information can appear in the recipient’s GSTR-2B.

The recipient must then account for the corresponding reduction or reversal of ITC as required.

The GST Portal includes supplier credit notes and amendments in the GSTR-2B ITC information.

Section 38 and Debit Notes

Debit notes reported by suppliers can also affect the information available to the recipient.

A debit note may increase the taxable value and tax relating to an earlier supply.

Where the additional tax is legally eligible as ITC for the recipient, the corresponding information can be reflected through the GST system after the supplier reports the document.

The recipient should reconcile debit-note information with its books and supporting documents before claiming the additional credit.

GSTR-2A vs GSTR-2B

GSTR-2A and GSTR-2B are often confused, but they are different.

GSTR-2A	GSTR-2B
Dynamic statement of inward supplies	Static, auto-drafted ITC statement
Information can change as suppliers upload or amend documents	Generated for a specified period based on prescribed cut-off dates
Used for reconciliation	Used as an important ITC reference while filing GSTR-3B
Includes supplier-reported information	Provides ITC availability and related classification
Does not itself create ITC entitlement	Does not itself create ITC entitlement

The GST Portal specifically describes GSTR-2B as a static auto-drafted statement.

Is GSTR-2B Proof That ITC Is Allowed?

No.

GSTR-2B is important evidence and a useful compliance statement, but the appearance of an invoice in GSTR-2B does not independently establish that every statutory condition for ITC has been satisfied.

For example, there may be restrictions under other provisions of the GST law that are not fully determined by the system-generated statement.

The GST Portal specifically advises taxpayers to self-assess and reverse credit where it is not legally available even if the relevant restriction is not captured by GSTR-2B.

What Should a Taxpayer Do If an Invoice Is Missing From GSTR-2B?

If a purchase invoice is missing, the taxpayer should first compare the purchase records with the supplier’s reporting.

Possible reasons can include:

• Supplier has not filed the relevant statement
• Invoice was reported in a later period
• Incorrect recipient GSTIN was reported
• Invoice number or other details were entered incorrectly
• Supplier amended or cancelled the document
• The document falls outside the relevant cut-off period
• There is an issue with the reporting or data transmission

The taxpayer should contact the supplier where appropriate and request correction or reporting through the applicable GST mechanism.

The recipient should also retain the underlying invoice and other supporting records.

Example of a Missing Invoice

Suppose ABC Ltd. purchases machinery from XYZ Ltd. in April.

ABC Ltd. has a valid tax invoice but does not find the invoice in its relevant GSTR-2B.

ABC Ltd. should not assume that the invoice has been permanently lost from the GST system.

It should:

1. Verify the invoice details in its own books.
2. Check the supplier’s GSTIN.
3. Confirm whether XYZ Ltd. has reported the invoice.
4. Check whether the invoice was reported under a later period.
5. Ask the supplier to verify the reporting.
6. Reconcile the invoice with subsequent GST statements.
7. Determine ITC eligibility under the applicable law before claiming the credit.

Supplier Mistakes Can Affect the Recipient

Section 38 demonstrates why GST compliance is interconnected.

Suppose a supplier accidentally enters the recipient’s GSTIN incorrectly.

The supplier may believe the invoice has been properly reported, but the actual recipient may not see the document correctly in its GST records.

Similarly, an incorrect taxable value or tax amount can create a difference between the recipient’s books and the GST statement.

Therefore, businesses should review GST invoices carefully at the time of purchase rather than waiting until the return filing deadline.

Monthly ITC Reconciliation

A business claiming significant ITC should consider performing regular reconciliation between:

Purchase Register + Tax Invoices + GSTR-2B + Accounting Records + GSTR-3B

The reconciliation can identify:

• Missing invoices
• Duplicate invoices
• Incorrect GSTINs
• Incorrect tax amounts
• Credit notes
• Debit notes
• Reverse-charge transactions
• Import-related differences
• Ineligible ITC
• ITC claimed but not appearing in the system
• ITC appearing in the system but not recorded in the books

Regular reconciliation can reduce the risk of carrying errors into subsequent GST periods.

Common Mistakes Related to Section 38

Claiming Every Credit Shown in GSTR-2B

A taxpayer should not blindly claim every amount shown as available.

Other provisions of GST law may restrict or deny ITC.

Ignoring Supplier Errors

A mismatch between the purchase register and GSTR-2B should be investigated.

Not Checking Credit Notes

Supplier credit notes can reduce the ITC corresponding to earlier invoices.

Ignoring Reverse Charge

Reverse-charge transactions require separate tax-payment and ITC treatment.

Ignoring Import Data

Import-related ITC may be reflected through ICEGATE data rather than supplier GSTR-1.

Failing to Reconcile Regularly

Waiting until the end of the financial year can make it more difficult to identify and correct supplier reporting issues.

Practical Example of Section 38 Compliance

Suppose a company purchases goods and services from ten suppliers during a month.

The purchase register shows total GST of ₹2,50,000.

The company’s GSTR-2B shows:

• ₹2,20,000 as ITC available
• ₹10,000 as ITC related to credit notes
• ₹5,000 as reverse-charge ITC
• ₹15,000 as ITC marked unavailable
• Other differences of ₹10,000 between the books and the statement

The company should not simply claim ₹2,50,000.

Instead, it should reconcile the differences.

It may discover that:

• One supplier has not yet filed the relevant document
• One invoice contains an incorrect GSTIN
• ₹10,000 relates to a credit note
• ₹15,000 is not available due to the system-identified restriction
• ₹5,000 relates to reverse charge and requires the applicable tax treatment

Only after completing the reconciliation and applying the relevant legal provisions should the company determine the amount of ITC that can actually be claimed.

Importance of Section 38 for Businesses

Section 38 has practical importance for almost every GST-registered business that receives taxable supplies and claims ITC.

It provides a structured electronic mechanism through which taxpayers can review supply information reported by suppliers and other relevant sources.

This improves visibility into:

• Purchase invoices
• Supplier reporting
• ITC availability
• Credit notes
• Debit notes
• Reverse-charge supplies
• ISD credits
• Import IGST

It also encourages better reconciliation between the supplier’s GST records and the recipient’s accounting records.

Section 38 and GST Return Filing

The relationship between Sections 37, 38 and 39 can be understood as follows:

Section	Main purpose
Section 37	Furnishing details of outward supplies
Section 38	Communication of inward-supply and ITC information
Section 39	Furnishing GST returns

The supplier reports outward supplies under the applicable mechanism.

The GST system uses relevant information to make recipient-side information available.

The recipient then uses the available information, along with its own records and the applicable legal provisions, while preparing its GST return.

Section 38 and Input Tax Credit Reconciliation

Section 38 is particularly important for ITC reconciliation because it provides the recipient with a system-generated view of information reported by suppliers and other specified sources.

However, reconciliation should not be limited to matching invoice numbers.

Businesses should also compare:

• Supplier GSTIN
• Invoice date
• Invoice number
• Taxable value
• IGST
• CGST
• SGST/UTGST
• Credit notes
• Debit notes
• Amendments
• Reverse-charge transactions
• Import data

Any significant difference should be investigated before the corresponding ITC is claimed.

Key Points of Section 38 CGST Act

The major points of Section 38 can be summarised as follows:

• Section 38 deals with communication of details of inward supplies and input tax credit.
• It is closely connected with the outward-supply information furnished under Section 37.
• The information is made available electronically to recipients.
• An auto-generated statement containing ITC information is provided.
• GSTR-2B is the principal practical statement used for this purpose.
• GSTR-2B is read-only and does not have to be filed by the taxpayer.
• It contains information from supplier filings, ISD filings and import data from ICEGATE, as applicable.
• The statement identifies ITC that may be available and specified ITC that is not available.
• The appearance of an invoice in GSTR-2B does not automatically create an unconditional right to ITC.
• Taxpayers must independently apply the eligibility conditions and restrictions under GST law.
• GSTR-2B is an important input for preparing the ITC portion of GSTR-3B.
• Credit notes and amendments can affect the ITC available to a recipient.
• Reverse-charge and import transactions require appropriate separate consideration.
• Regular reconciliation between purchase records and GSTR-2B helps identify discrepancies.

👉 Read More → Section 39 – Furnishing of returns

Conclusion

Section 38 of the CGST Act, 2017 provides the legal framework for electronically communicating information relating to inward supplies and input tax credit to registered recipients.

In practical GST compliance, this mechanism is closely associated with GSTR-2B, which provides taxpayers with an auto-generated and read-only statement containing relevant ITC information. The statement is generated using data reported by suppliers, Input Service Distributors and the import system, as applicable.

Section 38 is important because GST compliance is not limited to the supplier reporting a transaction. The recipient also needs reliable information to reconcile purchases and determine the ITC that can legally be claimed.

However, GSTR-2B should not be treated as an automatic approval of every amount of ITC shown in the statement. The taxpayer must still examine the conditions and restrictions applicable under the CGST Act and Rules. The GST Portal itself advises taxpayers to self-assess their ITC and reverse credit wherever it is not legally available.

For businesses, the practical approach is to regularly reconcile the purchase register, tax invoices, supplier-reported information, GSTR-2B and GSTR-3B. This helps identify missing invoices, incorrect GSTINs, credit notes, amendments, reverse-charge transactions and other differences before they become larger compliance problems.

Why Choose Sarkari Bakery?

🏛️

Official Information

Government schemes & banking information based on official sources.

📄

Step-by-Step Guides

Simple application process explained for every service.

🔄

Regular Updates

Content updated whenever official rules or services change.

🛡️

People-First Content

Helpful, transparent and user-focused content.

★★★★★

4.9/5

Trusted by thousands of users for Government, Banking & CSC information.

⭐ View Google Reviews