Goods and Services Tax (GST) and Corporate Tax Planning · Input Tax Credit and Computation of GST Liability

Section 38 CGST: Communication of Inward Supplies and ITC

Updated 11 October 2026 · Fact-checked

Section 38 requires the GST system to make available to a recipient, electronically, the details of outward supplies furnished by suppliers and an auto-generated statement of input tax credit. The statement shows credit that may be available and credit that cannot be availed. You verify it against your books before claiming credit.

Understand Communication of Details of Inward Supplies and ITC

Your supplier reports each sale to you in his outward supplies details under Section 37. Section 38 says those details, along with an auto-generated statement of input tax credit (ITC), must be made available to you electronically. The form, manner, time and conditions are as prescribed in the rules.

The auto-generated statement has two parts under Section 38(2). Clause (a) lists inward supplies on which credit may be available to you. Clause (b) lists supplies on which credit cannot be availed, wholly or partly, because of who furnished the details or how they behaved.

The Act lists the supplier-side triggers for clause (b). The details were furnished by a person: (i) within a prescribed period of taking registration; (ii) who has defaulted in paying tax, where the default has continued for a prescribed period; (iii) whose output tax payable per his statement of outward supplies during a prescribed period exceeds the output tax paid by him in that period by a prescribed limit; (iv) who, during a prescribed period, has availed credit that exceeds the credit he can avail in accordance with clause (a) by a prescribed limit; (v) who has defaulted in discharging tax liability under section 49(12), subject to prescribed conditions; or (vi) belonging to another prescribed class. The periods and limits are left to the rules, so do not quote numbers unless the question gives them.

In practice, this statement is what you know as GSTR 2B. Earlier, GSTR 2A was a dynamic view that changed as suppliers uploaded or amended invoices. GSTR 2B is a static statement generated for a tax period. Use these names as practical labels. The Act itself speaks only of the auto-generated statement.

The statement does not by itself give you credit. It is a communication. Your right to credit depends on the eligibility conditions for ITC, such as holding the invoice, receipt of goods or services, and the supplier's tax being paid. So you must reconcile it with your purchase books and act on differences.

Key rules to remember

What Section 38(1) makes available: Details of outward supplies (Section 37) + other prescribed supplies + auto-generated ITC statement → made available electronically to the recipient; Form, manner, time, conditions and restrictions are as prescribed.
Content of the statement, Section 38(2): (a) inward supplies where ITC may be available; (b) supplies where ITC cannot be availed, wholly or partly; Clause (b) applies on the supplier-side grounds in sub-clauses (i) to (vi).
Reconciliation difference: Difference = ITC as per books − ITC in the 'may be available' part of the statement, Section 38(2)(a) (clause (b) items excluded); Take only the clause (a) part of the statement as the comparator. Credit shown under clause (b) cannot be availed, so do not count it as supported. A positive difference means credit in books not supported by the clause (a) part. A negative difference means credit in the statement that is not in the books. Investigate both before claiming.
Supplier's outward details deadline, Section 37(1): On or before the 10th day of the month following the tax period; Late reporting by the supplier delays when the credit shows in your statement.

How to solve Communication of Details of Inward Supplies and ITC questions

For any question on communication of inward supplies, apply the Section 38 framework and then the facts.

1Identify who is the recipient and who is the supplier, and what supply is in question.
2State that the supplier's Section 37 details and the auto-generated ITC statement are made available to the recipient electronically under Section 38(1).
3Check which part of Section 38(2) the supply falls in: credit may be available, or credit cannot be availed.
4If it is in the blocked part, name the supplier-side ground, such as default in payment of tax or newly registered supplier, and say the details of the limits come from the rules.
5Compare the statement with the recipient's purchase register and list invoices missing, extra or different in value.
6Say what the recipient should do: claim eligible matching credit, follow up with the supplier on mismatches, and hold credit not supported by conditions.
7Conclude with the amount of credit that can be claimed now and the action for the balance.

Quickest way: Three-bucket reconciliation

When to use it: Use when a numerical or case question gives your books and the statement and asks how much credit you can claim.

Bucket 1: invoices in both books and statement with equal tax. Claim these if eligible.
Bucket 2: invoices in books but not in statement. Hold and follow up with the supplier.
Bucket 3: invoices in statement but not in books. Check whether goods or services were received, and whether credit is eligible or blocked.
Total the credit in Bucket 1 as claimable and state the action for the other two.

Common mistakes in Communication of Details of Inward Supplies and ITC

Treating the auto-generated statement as a grant of credit.
The word 'may be available' is read as 'is available'.
Fix: Write that the statement only communicates details. Eligibility still depends on the conditions for ITC.
Saying GSTR 2A and GSTR 2B are mentioned in Section 38.
Students mix practical forms with the Act.
Fix: Cite Section 38 for the auto-generated statement and use GSTR 2B only as its practical name.
Quoting fixed periods or limits for supplier defaults.
Students recall figures from the rules.
Fix: Say the period or limit is as prescribed, unless the question gives the figure.
Confusing Section 37 with Section 38.
Both deal with outward and inward details.
Fix: Section 37 is the supplier's duty to furnish. Section 38 is the recipient's receipt of the statement.
Ignoring clause (b) and claiming credit shown in the statement in full.
Students skim the second limb.
Fix: Always check whether the supplier falls in a clause (b) ground before concluding.

Worked examples

Example 1

Sharma Traders, a registered buyer, finds in its purchase register tax of ₹1,80,000 on invoices from various suppliers. The auto-generated statement shows ₹1,50,000 for the same period. The difference is one invoice of ₹30,000 tax from Verma Enterprises, which has not furnished its outward supplies details. Advise Sharma Traders.

Show the solution

Difference = ₹1,80,000 − ₹1,50,000 = ₹30,000, equal to the Verma invoice tax.
Under Section 38(1), the recipient sees only what suppliers furnish under Section 37. Verma's invoice is not reflected because Verma has not furnished details.
Check the ₹1,50,000 against Section 38(2). It is claimable only to the extent it sits in the clause (a) 'may be available' part. Any amount shown in the clause (b) 'cannot be availed' part, for example because a supplier is in default of tax payment, must be excluded. The facts do not show any such amount, so we take the whole ₹1,50,000 as clause (a) credit.
Credit of ₹1,50,000 can then be claimed if the other eligibility conditions are met, such as holding the invoice and receiving the goods or services.
The ₹30,000 is not supported by the statement. It should be held. Sharma Traders should ask Verma to report the invoice.

Answer: Sharma Traders can claim ₹1,50,000 now, provided none of it is shown in the clause (b) part of the statement and the eligibility conditions are met. It should hold ₹30,000 and follow up with Verma Enterprises to furnish the invoice.

Example 2

A recipient's statement shows an invoice with tax ₹60,000 from a supplier who is in default of tax payment for the prescribed period. Under which part of Section 38(2) does this fall, and what is the effect?

Show the solution

Section 38(2)(b)(ii) covers supplies furnished by a registered person who has defaulted in payment of tax, where the default has continued for the prescribed period.
So the ₹60,000 falls in the part showing credit that cannot be availed, wholly or partly.
The period of default is as prescribed and not stated in the Act.
The recipient should not claim this credit while it is shown in that part.

Answer: The invoice falls under Section 38(2)(b)(ii). The ₹60,000 credit cannot be availed while it is shown as unavailable on that ground.

Exam tips

Write the sub-section numbers: 38(1) for communication, 38(2)(a) and (b) for the two parts.
In case-based questions, name the supplier-side ground in clause (b) that fits the facts.
Do not give numerical limits for prescribed periods unless supplied.
Close every answer with a practical action: claim, hold or follow up.
If asked to distinguish GSTR 2A and 2B, call 2A a dynamic, supplier-reported view and 2B a static statement. Tie only the auto-generated statement (practically GSTR 2B) to Section 38, and do not attribute GSTR 2A to Section 38.

Practice questions from Input Tax Credit and Computation of GST Liability

Communication of Details of Inward Supplies and ITC in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Communication of Details of Inward Supplies and ITC: frequently asked questions

What is Section 38 of the CGST Act?

It provides that details of outward supplies furnished by suppliers, and an auto-generated ITC statement, be made available electronically to recipients. The statement shows credit that may be available and credit that cannot be availed.

What is the difference between GSTR 2A and GSTR 2B?

GSTR 2A is a dynamic, practical view of supplier-reported details that changes as suppliers file or amend. GSTR 2B is a static statement for a tax period and is the practical form of the auto-generated statement under Section 38. The Act does not name either form, and Section 38 speaks only of the auto-generated statement.

How do I reconcile GSTR 2B with books?

Match invoice by invoice with your purchase register. Claim matching eligible credit, chase suppliers for invoices missing from the statement, and check statement entries missing in your books.

Can I claim all credit shown in the statement?

No. The statement is only a communication. You must also meet the eligibility conditions, and credit shown as unavailable under Section 38(2)(b) cannot be availed.