Section 43A of the Central Goods and Services Tax Act, 2017 was introduced to provide a statutory framework for the procedure for furnishing returns and availing input tax credit under the proposed GST return system.
The provision was inserted through the Central Goods and Services Tax (Amendment) Act, 2018. It was intended to establish a framework under which taxpayers could verify, validate, modify or delete information relating to supplies furnished by suppliers and claim input tax credit on the basis of prescribed procedures.
However, Section 43A is not a current operative provision of the CGST Act. It was omitted by the Finance Act, 2022, along with Sections 42 and 43, as part of the restructuring of the GST return and input tax credit framework. The omission became effective from 1 October 2022.
Therefore, Section 43A is important mainly for understanding the historical development of the GST return system and the proposed new return architecture. It should not be treated as the procedure currently followed by taxpayers for filing GST returns or claiming input tax credit.
What Was Section 43A of the CGST Act?
Section 43A was titled:
“Procedure for furnishing return and availing input tax credit.”
It was inserted after Section 43 through the Central Goods and Services Tax (Amendment) Act, 2018.
The provision was designed to provide flexibility for prescribing the detailed procedure for:
- furnishing supply details;
- verifying supplier information;
- validating supply details;
- modifying or deleting supply information;
- availing input tax credit;
- verifying input tax credit;
- furnishing outward supply information;
- claiming credit where supplier information was not furnished; and
- dealing with tax associated with supplies reported by suppliers.
The actual operational details were intended to be provided through rules and the GST return system.
The original statutory text itself repeatedly used the expression “such as may be prescribed,” showing that Section 43A was intended to function together with detailed rules and the proposed GST return architecture.
Why Was Section 43A Introduced?
The original GST law contemplated a detailed electronic return system in which information reported by suppliers would become available to recipients.
The recipient would then be able to examine the supplier’s reported information and use it for determining eligible input tax credit.
The basic concept was:
Supplier reports outward supplies → Recipient verifies supplier information → Recipient claims eligible ITC → GST return is furnished.
This was intended to make the GST return system more data-driven and provide a mechanism for cross-verification between supplier-reported transactions and recipient ITC claims.
Section 43A formed part of the legislative effort to create this framework.
Insertion of Section 43A
Section 43A was inserted through the CGST Amendment Act, 2018.
The amendment inserted the provision after Section 43 and provided a separate statutory framework for furnishing returns and availing input tax credit.
The provision was therefore different from the original Sections 42 and 43.
Broadly:
- Section 42 dealt with matching, reversal and reclaim of input tax credit.
- Section 43 dealt with matching, reversal and reclaim of reduction in output tax liability.
- Section 43A dealt with the procedure for furnishing returns and availing input tax credit.
All three provisions were connected to the broader GST return and matching architecture.
Section 43A(1): Verification and Modification of Supplier Details
The original Section 43A(1) provided that, notwithstanding the provisions of Sections 16(2), 37 and 38, every registered person was required to verify, validate, modify or delete the details of supplies furnished by suppliers in the returns furnished under Section 39.
This was an important feature of the proposed system.
A recipient was not simply expected to accept every transaction automatically.
The recipient was contemplated as having the ability to:
- verify supplier-furnished details;
- validate the information;
- modify incorrect information; or
- delete information that did not belong to the recipient.
This was intended to give the recipient an active role in the return process.
Example
Suppose Supplier A reported an invoice showing:
- Recipient GSTIN: XYZ Ltd.
- Invoice value: ₹1,18,000
- GST: ₹18,000
XYZ Ltd. would be expected to examine the information.
If the invoice was genuinely received, the recipient could verify it.
If the invoice contained an incorrect detail, the proposed system contemplated the recipient having the ability to modify or delete the relevant information according to the prescribed procedure.
Section 43A(2): Procedure for Availing Input Tax Credit
Section 43A(2) provided that, notwithstanding Sections 41, 42 and 43, the procedure for availing input tax credit by the recipient and verification thereof would be such as may be prescribed.
This subsection was significant because it delegated the detailed operational procedure to the prescribed rules.
The law itself established the framework, while the detailed mechanism would be determined through the GST rules and return system.
This was particularly relevant because the GST return architecture was expected to evolve through electronic systems and prescribed procedures.
Section 43A(3): Furnishing Supplier Details
Section 43A(3) dealt with the procedure for furnishing details of outward supplies by the supplier on the common portal.
The purpose was to enable the recipient to use the supplier’s outward supply information for determining input tax credit.
In simple terms:
Supplier information → Common portal → Recipient → ITC determination
The provision therefore linked supplier-side reporting with recipient-side ITC availability.
The detailed procedure was again left to be prescribed.
Section 43A(4): ITC Where Supplier Did Not Furnish Details
One of the most discussed features of Section 43A was sub-section (4).
It dealt with the procedure for availing input tax credit in respect of outward supplies for which the supplier had not furnished the prescribed details.
The provision allowed the prescribed procedure to include a maximum limit on such ITC.
Importantly, the statute stated that this maximum amount could not exceed 20% of the input tax credit available on the basis of details furnished by suppliers under the relevant provision.
This 20% figure became particularly important in the development of the provisional ITC framework under the GST Rules.
However, it is essential not to confuse the statutory text of Section 43A with the later rules that were actually applied.
The 20% Provisional ITC Concept
The 20% ceiling under Section 43A(4) became associated with the historical concept of additional ITC where supplier details had not yet been furnished.
The broad concept was that a recipient could claim eligible credit based on supplier-furnished information and, subject to the prescribed mechanism, could potentially claim additional credit where the supplier had not yet furnished the relevant details.
The additional amount was subject to the prescribed limit.
The statutory wording specifically stated that the maximum amount could not exceed 20% of the ITC available on the basis of supplier-furnished details.
This was a feature of the historical GST return and ITC framework.
It should not be presented as the current general rule for claiming ITC.
Example of the Historical 20% Mechanism
Suppose a registered taxpayer had:
ITC based on supplier-furnished details = ₹1,00,000
Under the historical framework associated with Section 43A(4), the maximum additional ITC contemplated by the statutory provision could not exceed:
20% of ₹1,00,000 = ₹20,000
Therefore, the total credit that could potentially be considered under that historical framework would be:
- ITC based on supplier details: ₹1,00,000
- Maximum additional amount: ₹20,000
- Total: ₹1,20,000
This example explains the statutory ceiling contained in Section 43A(4).
It should not be used as a description of the current ITC entitlement mechanism.
Section 43A(5): Tax Specified by the Supplier
Section 43A(5) provided that the amount of tax specified in the outward supplies for which the supplier had furnished the details under sub-section (3) would be deemed to be the tax payable by the supplier under the Act.
The provision was intended to strengthen the relationship between supplier reporting and the supplier’s tax liability.
In simple terms, when the supplier furnished outward supply details through the prescribed mechanism, the tax amount reported in those supplies had statutory significance for determining the supplier’s tax payable.
Section 43A(6): Joint and Several Liability
Section 43A(6) contained another important provision.
It provided that the supplier and recipient of a supply would be jointly and severally liable to pay tax or to pay the input tax credit availed, as the case may be, in relation to outward supplies for which the relevant details had been furnished under sub-section (3) or (4), but the corresponding return had not been furnished.
This provision attempted to address situations in which supply information had been furnished but the corresponding return had not been filed.
It reflected the strong linkage that the proposed return architecture attempted to create between:
- supplier reporting;
- recipient ITC;
- payment of tax; and
- filing of returns.
Relationship Between Section 43A and Section 16
Section 43A expressly referred to Section 16.
This is important because Section 16 contains the fundamental conditions and restrictions relating to entitlement to input tax credit.
Section 43A was primarily procedural.
It was intended to establish a mechanism for furnishing and verifying information and determining the procedure for availing ITC.
Therefore, Section 43A should not be interpreted as independently creating an unrestricted entitlement to ITC.
The conditions contained elsewhere in the CGST Act remained relevant.
Relationship Between Section 43A and Section 37
Section 37 deals with furnishing details of outward supplies.
Section 43A was intended to connect supplier-furnished outward supply information with the recipient’s return and ITC process.
The original Section 43A(1) specifically referred to Section 37, while sub-section (3) contemplated the procedure for furnishing outward supply details on the common portal.
This demonstrates the intended data flow:
Section 37 → Supplier outward supply information → Recipient verification → ITC process
Relationship Between Section 43A and Section 38
Section 38 originally dealt with communication of details of inward supplies and input tax credit.
Section 43A was designed within this broader framework.
The recipient would receive or access supply information and use it as part of the ITC verification and return process.
However, the GST return framework was subsequently redesigned.
The current system should therefore not be explained by simply applying the original Section 43A architecture to today’s GSTR-2B and GSTR-3B process.
Relationship Between Section 43A and Section 41
Section 43A also expressly referred to Section 41.
The original Section 41 contained the concept of claim of input tax credit and provisional acceptance thereof.
The proposed Section 43A mechanism was therefore connected with the earlier provisional ITC framework.
This is an important historical point because Section 41 was subsequently substituted.
From 1 October 2022, the old provisional acceptance concept was removed from Section 41.
The GST Council’s records specifically note that the concept of provisionally accepted ITC was done away with as part of the 2022 changes.
Consequently, old explanations that combine Section 43A with the old Section 41 provisional ITC framework should be read as historical material.
👉 Read More → Section 42 – Matching, reversal and reclaim of input tax credit
Section 43A and the Proposed New GST Return System
Section 43A became closely associated with the development of the proposed new GST return system.
The GST Council’s records show that Section 43A was considered as part of the new return design.
The intended system sought to make supplier and recipient information more closely connected.
The broad objective was to create a structured electronic process in which:
- Suppliers furnished outward supply details.
- The information became available through the common portal.
- Recipients verified the information.
- Eligible ITC was determined according to the prescribed procedure.
- Returns were furnished based on the verified information.
However, the proposed new return system was ultimately not implemented in the form originally contemplated.
Why Section 43A Was Omitted
The GST return system underwent significant changes after the enactment of Section 43A.
The proposed new return architecture faced implementation and operational challenges.
The GST Council later recorded that the proposed Section 43A, which had been the basis of the new return design, had been deleted from the Act with the approval of the GST Council. The Council also noted that enhancements to the existing return system had already implemented many important features that had originally been contemplated under the new return design.
This eventually led to the omission of Section 43A along with Sections 42 and 43.
Omission of Section 43A
Section 43A was omitted through the Finance Act, 2022.
The omission became effective from 1 October 2022.
The official India Code material records that Sections 42, 43 and 43A were omitted by the Finance Act, 2022.
The GST Council’s 48th meeting material explains the practical consequences of the change. It records that the CGST Rules were amended because Sections 42, 43 and 43A had been omitted, and that the rules were being aligned with the GSTR-1/GSTR-2B/GSTR-3B return filing system.
The same exercise also involved removing the older two-way communication process and omitting forms such as GSTR-2 and GSTR-3 from the CGST Rules.
Section 43A and GSTR-2
The original Section 43A framework should be understood alongside the proposed role of GSTR-2.
The original GST design contemplated that recipients would receive details of inward supplies and use those details in determining ITC.
However, GSTR-2 was not ultimately implemented as the regular return mechanism originally contemplated.
The GST Council subsequently recorded that GSTR-2 and GSTR-3 were omitted from the CGST Rules as part of the changes accompanying the omission of Sections 42, 43 and 43A.
Therefore, old articles stating that Section 43A is the current legal basis for filing GSTR-2 should not be relied upon.
Section 43A and GSTR-2B
GSTR-2B belongs to the current GST information framework.
It should not be described as the same thing as the old Section 43A mechanism.
The current system evolved after the original new-return architecture was abandoned.
The GST Council specifically stated that the rules were being aligned with the GSTR-1/GSTR-2B/GSTR-3B system following the omission of Sections 42, 43 and 43A.
Therefore, although both systems involve supplier information and recipient ITC, they are legally and structurally different.
Section 43A and GSTR-3B
GSTR-3B is part of the current GST return framework.
The original Section 43A framework was designed around a proposed return system that included more extensive supplier-recipient verification.
Since Section 43A was omitted effective 1 October 2022, current GSTR-3B compliance should not be based on the old Section 43A procedure.
Instead, current ITC reporting must follow the provisions and rules applicable to the period in question.
Historical Example of Section 43A
Consider a registered business, ABC Ltd.
During a tax period, ABC Ltd. purchases goods from several suppliers.
Supplier information available under the historical proposed system shows eligible ITC of:
₹5,00,000
However, some suppliers have not yet furnished their outward supply details.
Under the historical framework associated with Section 43A(4), additional ITC in relation to supplies whose details had not been furnished could be subject to a prescribed maximum amount, with the statutory ceiling being 20% of the ITC available based on supplier-furnished details.
20% of ₹5,00,000 would be:
₹1,00,000
Therefore, the statutory ceiling contemplated by Section 43A(4) would be ₹1,00,000.
Again, this is a historical illustration of the statutory framework and is not a statement of the current general ITC rule.
Why the 20% Figure Should Not Be Used as a Current ITC Rule
A common mistake is to read Section 43A(4) and conclude that a taxpayer can currently claim an additional 20% ITC over the amount reflected in the relevant system.
That conclusion is incorrect.
Section 43A itself was omitted with effect from 1 October 2022.
Therefore, the 20% ceiling contained in its original text is not a current standalone entitlement available to taxpayers.
Current ITC must be determined under the provisions and rules that are actually in force for the relevant tax period.
Section 43A and the Old Provisional ITC System
Another important historical connection is with provisional ITC.
The earlier GST framework contemplated provisional acceptance of input tax credit.
The recipient could claim ITC based on the information available under the prescribed system, subject to subsequent matching and reconciliation.
Sections 42 and 43 provided the matching architecture, while Section 43A was intended to establish the return and ITC procedure.
This produced a connected legislative framework:
Section 41 → Provisional ITC
Section 42 → Matching of ITC
Section 43 → Matching of reduction in output tax liability
Section 43A → Return and ITC procedure
The 2022 amendments fundamentally changed this structure.
What Changed From 1 October 2022?
The 2022 changes resulted in several important developments.
Section 41 was substituted
The old provisional acceptance concept was removed.
Sections 42, 43 and 43A were omitted
The statutory provisions supporting the earlier matching architecture were removed.
GSTR-2 and GSTR-3 were omitted from the Rules
The older two-way return mechanism was formally removed from the CGST Rules.
Rules were aligned with the current return system
The GST Council records specifically state that relevant rules were amended to align them with the GSTR-1/GSTR-2B/GSTR-3B framework.
This represents a major transition in the architecture of GST return filing.
Section 43A vs Current GST Framework
| Particular | Historical Section 43A Framework | Current Framework |
|---|---|---|
| Section 43A | Operative as part of proposed framework | Omitted from 1 October 2022 |
| Main purpose | Return procedure and ITC verification | Current GST return and ITC provisions |
| Supplier information | Central to recipient verification | Supplier reporting continues through current mechanisms |
| Recipient verification | Specifically contemplated under Section 43A | Current system operates under applicable provisions and portal statements |
| Provisional ITC | Associated with old Section 41 framework | Old provisional acceptance concept removed |
| 20% additional ITC ceiling | Contained in historical Section 43A(4) | Not a current standalone ITC entitlement |
| GSTR-2 | Part of original/proposed architecture | Omitted from CGST Rules |
| GSTR-2B | Not the original Section 43A mechanism | Part of current GST ITC information framework |
| GSTR-3B | Current return did not constitute the original Section 43A architecture | Current return mechanism |
| Sections 42 and 43 | Matching provisions | Omitted |
| Current status | Historical | Current provisions apply |
Importance of Section 43A for GST Students
Section 43A is important when studying the evolution of GST because it explains why older GST literature contains references to:
- supplier verification;
- recipient validation;
- provisional ITC;
- 20% additional ITC;
- GSTR-2;
- GSTR-3;
- matching;
- two-way communication;
- new GST return system; and
- recipient verification of supplier information.
Without understanding Section 43A, it can be difficult to understand why the GST return framework described in some older textbooks differs significantly from the system taxpayers use today.
The provision therefore remains useful for historical and academic understanding, even though it is no longer operative.
Common Mistakes About Section 43A
Mistake 1: Treating Section 43A as a current GST provision
Section 43A was omitted with effect from 1 October 2022.
Therefore, it should not be presented as a current operative section.
Mistake 2: Saying taxpayers can currently claim 20% additional ITC under Section 43A
The 20% ceiling belonged to the original Section 43A framework.
Since Section 43A has been omitted, it cannot be used as a current independent legal basis for claiming additional ITC.
Mistake 3: Treating Section 43A as the legal basis of GSTR-2B
GSTR-2B is part of the current GST information framework.
The current system should not be described as simply continuing Section 43A.
Mistake 4: Saying Section 43A is still the procedure for filing GSTR-3B
It is not.
Section 43A was omitted in 2022.
Mistake 5: Treating GSTR-2 as a current regular return
GSTR-2 was part of the original/proposed return architecture and was subsequently omitted from the CGST Rules as part of the 2022 changes.
Section 43A and the Evolution of GST Returns
The history of Section 43A demonstrates how the GST return system evolved.
The original GST legislation contemplated an extensive system of information exchange and matching.
Later, the Government and GST Council modified the approach based on implementation experience and technological developments.
The proposed new return system was eventually withdrawn, while several features were incorporated into the existing GST return architecture.
The GST Council’s 47th meeting material specifically recorded that the proposed Section 43A, which formed the basis of the new return design, had been deleted from the Act with the approval of the GST Council.
Later, the Finance Act, 2022 and related notifications completed the statutory transition by omitting Sections 42, 43 and 43A with effect from 1 October 2022.
Key Points to Remember
The important points regarding Section 43A are:
- Section 43A was titled “Procedure for furnishing return and availing input tax credit.”
- It was inserted through the CGST Amendment Act, 2018.
- It was designed to support the proposed GST return and ITC verification framework.
- Section 43A(1) contemplated verification, validation, modification or deletion of supplier-furnished supply details.
- Section 43A(2) provided that the procedure for availing and verifying ITC would be prescribed.
- Section 43A(3) dealt with the procedure for furnishing supplier outward supply information on the common portal.
- Section 43A(4) dealt with ITC relating to outward supplies whose details had not been furnished by suppliers.
- The statutory text of Section 43A(4) contained a maximum ceiling of 20% of the ITC available on the basis of supplier-furnished details.
- Section 43A(5) provided that tax specified in relevant outward supply details would be deemed to be tax payable by the supplier.
- Section 43A(6) contained a joint and several liability provision for specified circumstances where the corresponding return had not been furnished.
- Section 43A was closely connected with the proposed new GST return system.
- The proposed new return system was not implemented in the form originally contemplated.
- Section 43A was subsequently omitted by the Finance Act, 2022.
- The omission became effective from 1 October 2022.
- Sections 42, 43 and 43A were omitted as part of the transition away from the earlier two-way communication process.
- GSTR-2 and GSTR-3 were also omitted from the CGST Rules as part of the transition.
- The GST Council records state that the rules were aligned with the GSTR-1/GSTR-2B/GSTR-3B return filing system.
- The historical 20% mechanism under Section 43A should not be treated as a current general ITC entitlement.
- Current ITC claims must be examined under the provisions and rules currently in force.
- Section 43A remains relevant for understanding the historical development of GST return filing and input tax credit.
Conclusion
Section 43A of the CGST Act was introduced to provide a statutory framework for the procedure for furnishing GST returns and availing input tax credit. It was closely connected with the proposed GST return architecture in which supplier information would be made available to recipients for verification and ITC determination.
The provision contemplated verification, validation, modification and deletion of supplier-furnished details, prescribed procedures for availing and verifying ITC, supplier-side furnishing of outward supply information, and a historical mechanism for dealing with supplies whose details had not been furnished by suppliers. The original Section 43A(4) also contained a statutory ceiling of 20% for the specified additional ITC mechanism.
However, the new return architecture associated with Section 43A was not implemented in the form originally contemplated. The GST Council later recorded that the proposed Section 43A, which formed the basis of the new return design, had been deleted from the Act.
As part of the wider 2022 GST return reforms, Sections 42, 43 and 43A were omitted. The changes took effect from 1 October 2022, and the GST Council records specifically state that the corresponding GST Rules were aligned with the GSTR-1, GSTR-2B and GSTR-3B return filing system.
Therefore, Section 43A should now be understood primarily as a historical provision explaining the evolution of the GST return and input tax credit framework. The old 20% additional ITC mechanism and the supplier-recipient verification procedure under Section 43A should not be presented as current standalone GST compliance requirements.
For current GST compliance, taxpayers should rely on the provisions and rules applicable to the relevant tax period rather than the omitted Section 43A.
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