Decoding Rule 36(4) of CGST: ITC available only 20% more of Invoices uploaded by the Supplier

Among all the confusions and complexities, here we have one more, by the Notification No.49/2019-Central Tax dated 9th October 2019 which inserts a sub rule (4) in Rule 36 of CGST Rules as below:

“(4) Input tax credit to be availed by a registered person in respect of invoices or debit notes, the details of which have not been uploaded by the suppliers under sub-section (1) of section 37, shall not exceed 20 per cent. of the eligible credit available in respect of invoices or debit notes the details of which have been uploaded by the suppliers under sub-section (1) of section 37.”

Accordingly, input tax credit is not available in excess of 20% more of invoices uploaded by the supplier. To illustrate the rule further, let’s consider the following example:

Particulars  Amount
Total ITC to be availed as per books        1,00,000 A
Invoices in respect of ITC uploaded by the suppliers           70,000 B
Invoices in respect of ITC not uploaded by the suppliers           30,000 C
Particulars  Amount
Invoices in respect of ITC uploaded by the suppliers           70,000 B
ADD: 20% of Rs.70000/-           14,000 D
Total ITC can be availed for the month (Max. of Rs.100000/- (A)           84,000 E

In other way, you can calculate as per below method as well:

Particulars  Amount
Invoices in respect of ITC not uploaded by the suppliers           30,000 C
LESS: 20% of Rs.70000/-           14,000 D
ITC not available for the month           16,000 F
Particulars  Amount
Total ITC to be availed as per books        1,00,000 A
LESS: ITC not available for the month           16,000 F
Total ITC can be availed for the month (Max. of Rs.100000/- (A)           84,000 E

From the above example, ITC of Rs.84000/- can be availed.

Let’s analyse with another example:

Particulars  Amount
Total ITC to be availed as per books  1,00,000 A
Invoices in respect of ITC uploaded by the supplier     90,000 B
Invoices in respect of ITC not uploaded by the supplier     10,000 C
Particulars  Amount
Invoices in respect of ITC uploaded by the supplier     90,000 B
ADD: 20% of Rs.90000/-     18,000 D
Total ITC can be availed for the month (Max. of Rs.100000/- (A)  1,08,000 E

In other way, you can calculate as per below method as well:

Particulars  Amount
Invoices in respect of ITC not uploaded by the supplier     10,000 C
LESS: 20% of Rs.90000/-     18,000 D
ITC not available for the month      -8,000 F
Particulars  Amount
Total ITC to be availed as per books  1,00,000 A
LESS: ITC not available for the month      -8,000 F
Total ITC can be availed for the month (Max. of Rs.100000/- (A)  1,08,000 E

From the above example, since, the Row ‘F’ shows negative figure, total ITC of Rs.100000/- as per books can be fully availed.

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4 Comments

  1. Usman Basha says:

    In notification no 49/2019, CGST 36 (4) rule inserted but didn’t mentioned its applicability, please bring clarity with what effect it is applicable.

    Thanks

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