Section 38 is the recipient's side of section 37. Suppliers' reported invoices are compiled into a statement of input tax credit for each recipient (Form GSTR-2B), which shows what credit is available and what is not. Since 01.01.2022 a recipient can take credit only on invoices that appear there.
Key points
- Under section 38(1) of the CGST Act, 2017 the details of outward supplies furnished by suppliers, and a statement of input tax credit, are made available electronically to each recipient (Form GSTR-2B).
- The statement shows supplies on which credit may be available, and supplies on which it cannot be availed — for instance where the supplier is newly registered, has defaulted in paying tax, or has reported far more tax than it paid (section 38(2)(b)).
- Section 16(2)(aa) makes appearance in this statement a condition for credit, and section 16(2)(ba) denies credit on supplies the statement shows as restricted.
- From 01.10.2025 the Finance Act, 2025 replaced the "auto-generated" statement with a "statement" and added clause (c) — the legal basis for the Invoice Management System, in which recipients accept, reject or keep invoices pending before GSTR-2B is finalised.
HistoryThe original section 38 (2017–2022)— A recipient's return of inward supplies (GSTR-2) — enacted but never operated.
As enacted, section 38 required each recipient to verify, modify or add to its suppliers' details and file a return of inward supplies (Form GSTR-2), feeding the matching process in sections 42 and 43. Filing of GSTR-2 was suspended from the outset, and recipients relied on the view-only GSTR-2A, and from 2020 the static monthly GSTR-2B (Rule 60). Rule 36(4) then capped credit not reflected in GSTR-2A/2B — 20% from 09.10.2019, 10% from 01.01.2020, 5% from 01.01.2021 — until section 16(2)(aa) from 01.01.2022 limited credit to invoices reflected in the statement.
The Finance Act, 2022 substituted the present section from 01.10.2022 (Notification 18/2022-Central Tax). The original text is in the notes below the statute.
The provisions
38(1)Statement made available to recipients
Statutory text
(1) The details of outward supplies furnished by the registered persons under sub-section (1) of section 37 and of such other supplies as may be prescribed, and 2[a statement] containing the details of input tax credit shall be made available electronically to the recipients of such supplies in such form and manner, within such time, and subject to such conditions and restrictions as may be prescribed.
1. Substituted (w.e.f. 1st October, 2022 vide Notification No. 18/2022 - CT dated 28.09.2022.) by s. 104 of The Finance Act 2022 (No. 6 of 2022) for
Section 38. Furnishing details of inward supplies. -
(1) Every registered person, other than an Input Service Distributor or a non-resident taxable person or a person paying tax under the provisions of section 10 or section 51 or section 52, shall verify, validate, modify or delete, if required, the details relating to outward supplies and credit or debit notes communicated under sub-section (1) of section 37 to prepare the details of his inward supplies and credit or debit notes and may include therein, the details of inward supplies and credit or debit notes received by him in respect of such supplies that have not been declared by the supplier under sub-section (1) of section 37.
(2) Every registered person, other than an Input Service Distributor or a nonresident taxable person or a person paying tax under the provisions of section 10 or section 51 or section 52, shall furnish, electronically, the details of inward supplies of taxable goods or services or both, including inward supplies of goods or services or both on which the tax is payable on reverse charge basis under this Act and inward supplies of goods or services or both taxable under the Integrated Goods and Services Tax Act or on which integrated goods and services tax is payable under section 3 of the Customs Tariff Act, 1975 (51 of 1975), and credit or debit notes received in respect of such supplies during a tax period after the tenth day but on or before the fifteenth day of the month succeeding the tax period in such form and manner as may be prescribed:
Provided that the Commissioner may, for reasons to be recorded in writing, by notification, extend the time limit for furnishing such details for such class of taxable persons as may be specified therein:
Provided further that any extension of time limit notified by the Commissioner of State tax or Commissioner of Union territory tax shall be deemed to be notified by the Commissioner.
(3) The details of supplies modified, deleted or included by the recipient and furnished under sub-section (2) shall be communicated to the supplier concerned in such manner and within such time as may be prescribed.
(4) The details of supplies modified, deleted or included by the recipient in the return furnished under sub-section (2) or sub-section (4) of section 39 shall be communicated to the supplier concerned in such manner and within such time as may be prescribed.
(5) Any registered person, who has furnished the details under sub-section (2) for any tax period and which have remained unmatched under section 42 or section 43, shall, upon discovery of any error or omission therein, rectify such error or omission in the tax period during which such error or omission is noticed in such manner as may be prescribed, and shall pay the tax and interest, if any, in case there is a short payment of tax on account of such error or omission, in the return to be furnished for such tax period:
Provided that no rectification of error or omission in respect of the details furnished under sub-section (2) shall be allowed after furnishing of the return under section 39 for the month of September following the end of the financial year to which such details pertain, or furnishing of the relevant annual return, whichever is earlier.
* Enforced w.e.f. 22nd June, 2017.
2. Substituted (w.e.f. 01.10.2025) by section 127 of the Finance (No. 7) Act, 2025.
- Rule 60, CGST Rules — GSTR-2A and GSTR-2B
- Notification 16/2025-Central Tax — commencement of the 2025 amendments, 01.10.2025
38(2)Credit available and credit restricted
Statutory text
(2) The 2[statement referred in] sub-section (1) shall consist of––
(a) details of inward supplies in respect of which credit of input tax may be available to the recipient; 3[****]
(b) details of supplies in respect of which such credit cannot be availed, whether wholly or partly, 4[including], on account of the details of the said supplies being furnished under sub-section (1) of section 37,––
(i) by any registered person within such period of taking registration as may be prescribed; or
(ii) by any registered person, who has defaulted in payment of tax and where such default has continued for such period as may be prescribed; or
(iii) by any registered person, the output tax payable by whom in accordance with the statement of outward supplies furnished by him under the said sub-section during such period, as may be prescribed, exceeds the output tax paid by him during the said period by such limit as may be prescribed; or
(iv) by any registered person who, during such period as may be prescribed, has availed credit of input tax of an amount that exceeds the credit that can be availed by him in accordance with clause (a), by such limit as may be prescribed; or
(v) by any registered person, who has defaulted in discharging his tax liability in accordance with the provisions of sub-section (12) of section 49 subject to such conditions and restrictions as may be prescribed; or
(vi) by such other class of persons as may be prescribed.]
4[(c) such other details as may be prescribed.]
3. Omitted (w.e.f. 01.10.2025) by section 127 of the Finance (No. 7) Act, 2025.
4. Inserted (w.e.f. 01.10.2025) by section 127 of the Finance (No. 7) Act, 2025.
What it means
Clause (b) puts the risk of a doubtful supplier on the recipient at the stage of credit: supplies in the restricted categories are shown, but credit on them is barred by section 16(2)(ba). Most categories operate only once the rules prescribe the periods and limits. From 01.10.2025 the word "including" makes the listed categories illustrative rather than exhaustive.
The statement is the starting point, not the end: the recipient's credit still depends on the other conditions of section 16, and on the supplier actually paying the tax (section 16(2)(c), section 41(2)). High Courts had set aside denials of credit based only on an invoice not appearing in GSTR-2A, without inquiry into the supplier (Suncraft Energy, Calcutta HC, 2023); since the Supreme Court affirmed the Gujarat High Court's judgment upholding section 16(2)(c) in Bhandari Scrap Traders (2026), those decisions need careful reading — see section 16.
- (a) inward supplies on which credit may be available;
- (b) supplies on which credit cannot be availed, wholly or partly — including where the supplier (i) is within a prescribed period of registration, (ii) has defaulted in paying tax for a prescribed period, (iii) has paid output tax short of its reported liability beyond a prescribed limit, (iv) has availed credit beyond what clause (a) allows by a prescribed limit, (v) has defaulted in paying the minimum cash portion required under section 49(12), or (vi) falls in another prescribed class;
- (c) such other details as may be prescribed (from 01.10.2025).
Statutory text as published on the CBIC tax information portal, as on 03.10.2026; the numbered notes record each amendment. Official source
Common questions
- What is GSTR-2B?
- The monthly statement of input tax credit made available to each recipient under section 38 of the CGST Act, compiled from suppliers' GSTR-1 filings. Since 01.01.2022 credit is available only on invoices reflected in it (section 16(2)(aa)).
- What is the legal basis of the Invoice Management System?
- Section 38 as amended by the Finance Act, 2025 from 01.10.2025, which replaced the "auto-generated" statement with a statement that reflects the recipient's acceptance or rejection of invoices.
Commentary and case notes checked against the judgments and CBIC sources on 04.10.2026.
What it means
GSTR-2B is generated monthly (on the 14th of the following month) from the suppliers' GSTR-1 and invoice furnishing facility filings, and also reflects import of goods. Unlike GSTR-2A, which changes as suppliers file, GSTR-2B is fixed for the period.
From 01.10.2024 the GSTN introduced the Invoice Management System, in which the recipient may accept, reject or keep pending each invoice before GSTR-2B is generated. The Finance Act, 2025, with effect from 01.10.2025 (Notification 16/2025-Central Tax), dropped the word "auto-generated" — so the statement reflects the recipient's own actions — and enabled "such other details as may be prescribed".