“Navigate ITC mismatches between GSTR 3B and GSTR 2A from 09.10.2019 to 31.12.2021 with CBIC’s Circular No. 193/05/2023-GST. Explore rule 36(4) changes, limits on ITC availment, and case laws. Get insights on dealing with excess ITC and necessary certificates. Stay compliant with the latest guidelines.”
The Circular No. 193/05/2023-GST is issued by the CBIC to clarify the manner of dealing mismatches between GSTR 3B and GSTR 2A for the period 09-10-2019 to 31-12-2021 with respect to rule 36(4) of the CGST Rules.
Circular No. 183/15/2022-GST dated 27th December 2022 provided clarifications for dealing with the difference of ITC in GSTR-3B vs GSTR-2A from 01-07-2017 to 08-10-2019.
Rule 36(4) allows registered persons to claim provisional ITC in respect of invoices or debit notes, the details of which have not been furnished by the suppliers under sub-section (1) of section 37.
The availability of ITC is subject to certain restrictions and conditions. These restrictions and conditions are specified in Section 16 of the CGST Act.
Availment of GST ITC was subjected to restrictions from July 1, 2017. However, restrictions regarding availment of ITC up to certain specified limit beyond the ITC available as per GSTR-2A were provided only from October 9, 2019. This limit was 20%, 10%, and 5% in the respective years. From January 1, 2022, ITC can only be availed up to the extent communicated in GSTR-2B.
- July 1, 2017: The GST Act came into force, and ITC was first made available. However, the restrictions on availment of ITC as per GSTR 2A were not specified until October 9, 2019.
- October 9, 2019: Rule 36(4) of the CGST Rules was amended to allow registered persons to claim ITC up to a certain specified limit beyond the ITC available as per GSTR-2A. This limit was 20%.
- January 1, 2020: The limit for claiming ITC under Rule 36(4) was reduced to 10%.
- January 1, 2021: The limit for claiming ITC under Rule 36(4) was reduced to 5%.
- January 1, 2022: Clause (aa) was inserted into subsection (2) of section 16 of the CGST Act, which states that ITC can only be availed up to the extent communicated in GSTR-2B.
Further, ITC availment is subject to the condition that tax has been paid by the supplier. Rule 36(4) of CGST Rules allows provisional ITC availment, but it is subject to the same condition.
- Section 16(2)(c) of the CGST Act states that ITC cannot be availed unless tax on the said supply has been paid by the supplier. This means that the supplier must have paid the GST on the supply before the recipient can claim ITC for it.
Rule 36(4) of the CGST Rules allows registered persons to claim provisional ITC in respect of invoices or debit notes, the details of which have not been furnished by the suppliers under sub-section (1) of section 37. This means that the recipient can claim ITC for the invoice even if the supplier has not yet filed the invoice with the GST portal. However, the provisional ITC must be reversed if the supplier does not file the invoice within a specified period of time.
In both cases, ITC can only be availed if the supplier has paid the GST on the supply. This is to ensure that the government receives the revenue that is due to it.
| Tax Period | Maximum ITC Allowed to the extent of GSTR 2A |
| 09-10-2019 to 31-12-2019 | 120% of GSTR 2A |
| 01-01-2020 to 31-12-2020 | 110% of GSTR 2A |
| 01-01-2021 to 31-12-2021 | 105% of GSTR 2A |
Manner of dealing with the cases where the ITC availed in GSTR 3B is more than total amount of ITC available as per FORM GSTR-2A for the period 09-10-2019 to 31-12-2021 is as follows :
1. The excess ITC which has been availed shall not be admissible as per rule 36(4) of CGST Rules as applicable during the said period even if the requisite certificate as prescribed in Circular No. 183/15/2022-GST dated 27.12.2022 is submitted by the registered person.
2. ITC availed in FORM GSTR-3B in excess of that available in FORM GSTR-2A up to an prescribed limit (20%, 10% or 5% as the case may be) can be allowed subject to production of the requisite certificates as per Circular No. 183/15/2022-GST dated 27.12.2022.
3. CA certificate is necessary if the ITC to be claimed is more than 5 lakhs and not reflected in GSTR 2A. However, if the ITC not reflected in GSTR 2A is less than 5 lakhs, a declaration from the supplier is required.
The following Illustration provided in the circular for ease understanding.
It is to be noted that, the condition of rule 36(4) will be cumulatively applicable for the following period and ITC shall be adjusted on cumulative basis.
1. February to August, 2020 (Notification No. 30/2020-CT dated 03.04.2020)
2. April to June, 2021 (Notification No. 27/2021-CT dated 01.06.2021)
These instructions apply only to ongoing proceedings for the period 01.04.2019 to 31.12.2021, including pending adjudication or appeal proceedings.
If the tax payers that have challenged the denial of provisional ITC under rule 36(4) in an adjudication or appeal proceeding will be able to benefit from these provisions.
Author Bio
