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.
Author Bio
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
appreciable information .Thanks
Good example for better understandng.
sir pls help me understanding the negative ITC, however ITC is restricted right