Section 38 of CGST Act - Communication of Details of Inward Supplies and Input Tax Credit
Section 38 of the Central Goods and Services Tax Act, 2017 deals with the electronic communication of details of inward supplies and input tax credit to a recipient through an auto-generated statement. The present provision is materially different from the original Section 38 that existed when the CGST Act was introduced.
Updated: 15 September 2026
What is Section 38 of the CGST Act?
Section 38 forms part of Chapter IX of the CGST Act dealing with returns. It provides the statutory framework for making supplier-reported supply information and an auto-generated input tax credit statement electronically available to recipients.
In practical terms, the provision links information furnished by suppliers under Section 37 with the recipient's information concerning inward supplies and input tax credit.
Current Section 38 - Legal Provision
38. Communication of details of inward supplies and input tax credit.
(1) The details of outward supplies furnished by registered persons under Section 37(1), together with such other supplies as may be prescribed, and an auto-generated statement containing details of input tax credit are to be made available electronically to the recipients.
Such information is made available in the prescribed form and manner, within the prescribed time and subject to the applicable conditions and restrictions.
(2) The auto-generated statement referred to in sub-section (1) consists broadly of:
- details of inward supplies in respect of which input tax credit may be available to the recipient; and
- details of supplies in respect of which input tax credit cannot be availed, wholly or partly, because the supplier falls within specified statutory or prescribed categories.
Those categories include suppliers falling within the prescribed period after obtaining registration; suppliers having specified defaults in payment of tax; cases involving prescribed differences between declared output tax liability and tax paid; specified excess availment of input tax credit; defaults relating to the discharge of liability under Section 49(12); and such other prescribed classes of persons.
The above is an explanatory presentation of the current provision. For the authoritative statutory text and amendments, the official text of the CGST Act should be consulted.
How Section 38 Works
The present Section 38 does not require a recipient to furnish a separate statutory statement of inward supplies in the manner contemplated by the original 2017 provision. Instead, it provides for electronic communication of inward-supply and input-tax-credit information based principally on supplier-furnished details and the prescribed GST system.
| Provision | Purpose |
|---|---|
| Section 37 | Supplier furnishes details of outward supplies. |
| Section 38(1) | Relevant supply details and an auto-generated ITC statement are communicated electronically to the recipient. |
| Section 38(2)(a) | Identifies inward supplies in respect of which ITC may be available. |
| Section 38(2)(b) | Identifies specified supplies in respect of which ITC cannot be availed wholly or partly. |
Auto-Generated Input Tax Credit Statement
A central feature of Section 38 is the auto-generated statement made electronically available to the recipient. The statement separates supply information into categories relevant to the availability or restriction of input tax credit.
Section 38 should therefore be read together with Section 16 of the CGST Act, which prescribes eligibility and conditions for taking input tax credit, and other applicable provisions of the Act and Rules.
Key Point
Appearance of an inward supply in an auto-generated statement should not be treated in isolation as establishing final entitlement to input tax credit. ITC remains governed by the applicable conditions, restrictions and other requirements of the CGST Act and the Rules.
When Can Input Tax Credit Be Restricted Under Section 38?
Section 38(2)(b) contemplates identification of supplies in respect of which input tax credit cannot be availed, either wholly or partly. The statutory categories include specified circumstances relating to the supplier or the supplier's tax compliance.
1. Newly Registered Suppliers
Supplies reported by a registered person within such period after taking registration as may be prescribed can fall within the category specified by Section 38(2)(b).
2. Default in Payment of Tax
The provision covers a registered supplier who has defaulted in payment of tax where the default continues for the prescribed period.
3. Difference Between Output Tax Payable and Tax Paid
Section 38 also contemplates prescribed situations where the supplier's output tax payable according to the statement of outward supplies exceeds the output tax actually paid beyond the prescribed limit.
4. Excess Availment of Input Tax Credit
Another statutory category concerns a supplier who, during the prescribed period, has availed input tax credit exceeding the credit that could be availed by the prescribed limit.
5. Default Under Section 49(12)
The provision also refers to a registered person who defaults in discharging tax liability in accordance with Section 49(12), subject to the prescribed conditions and restrictions.
6. Other Prescribed Classes
Section 38(2)(b) additionally enables other prescribed classes of persons to be covered for the purposes of the auto-generated statement.
Section 38 and Input Tax Credit
Section 38 is principally an information and communication provision. The substantive entitlement to input tax credit must be determined with reference to the relevant ITC provisions, particularly Section 16 and other applicable provisions of the CGST Act and CGST Rules.
A registered person should therefore reconcile purchase records, supplier invoices and the information communicated through the GST system before claiming input tax credit in the return.
Old Section 38 and the Present Law
The original Section 38 of the CGST Act dealt with furnishing details of inward supplies and contemplated verification, validation, modification or deletion of supplier-reported information by the recipient. It also contained provisions concerning furnishing inward-supply details and rectification of errors or omissions.
That statutory framework was replaced with effect from 1 October 2022. Accordingly, the old text should not be presented as the current Section 38. The current provision focuses on electronic communication of supply information and the auto-generated statement concerning input tax credit.
Related CGST Act Provisions
Frequently Asked Questions
What is Section 38 of the CGST Act?
Section 38 provides for electronic communication to recipients of relevant details of inward supplies and an auto-generated statement containing details relating to input tax credit.
Does Section 38 still deal with furnishing inward-supply details?
The original provision did. However, Section 38 was substituted with effect from 1 October 2022. The present provision is titled "Communication of details of inward supplies and input tax credit."
Does Section 38 determine final eligibility for input tax credit?
Section 38 provides the statutory mechanism for communication of relevant information. Actual entitlement to ITC remains subject to Section 16 and the other applicable provisions, conditions and restrictions under GST law.
Which section should be read with Section 38?
Section 38 should particularly be read with Section 37 concerning outward supply details, Section 16 concerning eligibility and conditions for ITC, Section 39 concerning returns, Section 41 concerning availment of ITC and other applicable provisions of the CGST Act and Rules.
Official GST Resources
For the authoritative statutory text, amendments, notifications, circulars and GST compliance information, refer to the official Government resources listed in the sidebar.