CBIC has issued a Departmental Circular No 142/12/2020- GST on 9th October, 2020 clarifying applicability of Rule 36(4) of the CGST Rules, 2017 for the months of February 20 to August 2020.

Earlier on 11th November, 2019 CBIC had clarified that ITC is to be availed based on Invoices or debit notes reported by suppliers. Any invoices or debit notes not reported by suppliers (beyond a specified limit) should be reversed in Form GSTR 3B.

Due to outbreak of COVID-19 relief was provided to taxpayers vide Notf No 30/2020-CT, dated 03.04.2020, whereby it had been prescribed that the condition made under sub-rule (4) of rule 36 of the CGST Rules to be checked cumulatively for the tax period February, 20 to August, 20. Any adjustment for the said periods shall be made in Return in  Form GSTR 3B to be furnished for the month of September, 20.

Now, CBIC has issued circular to Departmental officers to clarify that the applicability of said provisions are in force and taxpayers are to reconcile the ITC and avail the ITC in Form GSTR 3B for September, 20. The cumulative amount of ITC availed for the said months in FORM GSTR-3B should not exceed 110% of the cumulative value 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 of the CGST Act, till the due date of furnishing of the statements in FORM GSTR-1 for the month of September, 2020

Important to note that any invoice uploaded by suppliers beyond the due date for furnishing Form GSTR 1 shall not be taken into account for computation of eligible ITC. Any invoices reported by suppliers beyond the due date should not be availed while furnishing For GSTR 3B for Sept 20 and availing such credit shall be deemed as availing excess credit.

Any failure to reverse such excess credit shall be treated as availing of Ineligible ITC during the month of September 20. Any excess ITC arising out of availment is required to be reversed in Table 4(B)(2) of Form GSTR 3B for the month of September, 20.

It has been advised to ascertain the details of invoices uploaded by their suppliers under subsection (1) of section 37 of the CGST Act for the periods of February, 20 to August, 2020, till the due date of furnishing of the statement in FORM GSTR-1 for September, 2020 as reflected in GSTR-2As. (Due date for Sept 20 is 11th Oct, 20).

Manner of  cumulative reconciliation for the said months in terms of proviso to subrule (4) of rule 36 of the CGST Rules is explained by way of illustration –

Month Eligible ITC as per CGST Act ITC Availed in GSTR 3B Invoices uploaded by Supplier and availed (eligible) Effect of cumulative application Reversal required
Feb 20 300 300 270 Maximum eligible ITC in terms of rule 36 (4) is 2450 + [10% of 2450] =2695. Availed ITC – 2750.

Hence, ITC of 55 [2750-2695] would be required to be reversed

ITC reversal to the extent of Rs 55 is required to be made in Sept,20 GSTR 3B
Mar 20 400 400 380
Apr 20 500 500 450
May 20 350 350 320
June 20 450 450 400
July 20 550 550 480
Aug 20 200 200 150
Total 2750 2750 2450
Sept 20 500 385 350 10% rule to be ascertained independently for Sep 20 In the FORM GSTR-3B for Sept, 2020, avail ITC of 385 under Table 4(A) and  reverse ITC of 55 under Table 4(B)(2)

Note – How to comply with the manner of availment of ITC as per Circular –

  1. Download GSTR 2A for Feb to Aug 20 and ascertain eligible ITC as per GSTR 2A (remove RCM invoices and ineligible Invoices)
  2. Check eligible ITC as per books which is availed in GTSR 3B for the months of Feb 20 to Aug 20
  3. Reverse any excess ITC as computed as per books Vs. GSTR 2A +10%. In case there is no excess ITC availed, there is no need to reverse any ITC in GSTR 3B for September 20.


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Disclaimer: The content of this document is for general information purpose only. TaxMarvel shall not accept any liability for any decision taken based on the advice. You should carefully study the situation before taking any decision.

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