New Rule 36(4) of CGST has been inserted vide Notification no 49/2019 Central Tax dated 9-10-2019 which reads as under:
‘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.’
It simply means that the input credit cannot be taken in excess of 20% of the credit as appearing in GSTR-2A.
Let us discuss the practical illustration with journal entries of availing ITC restricted to 20% more of invoices uploaded by the suppliers in our books of accounts. (*Figures considered in the illustration are as per the Circular No.123/42/2019).
Say a taxpayer ‘R’ receives 100 invoices (for inward supply of goods or services) involving ITC of Rs.10 lakhs, from various suppliers during the month of Oct, 2019 and has to claim ITC in his FORM GSTR-3B of October, to be filed by 20th Nov, 2019,
For October 2019: –
a) Purchases A/c – Dr 55,55,000
GST Input A/c – Dr 10,00,000
To Creditors A/c – 65,55,000
b. And as illustrated above, if out of the total ITC of Rs.10,00,000 for the month of October, only Rs.6,00,000 ITC worth invoices were uploaded by the suppliers
Deferred GST Input (Oct’19) A/c – Dr 2,80,000
To GST Input A/c – 2,80,000
[Balance ITC of Rs.2,80,000 i.e. (10,00,000 – (6,00,000 + (6,00,000*20%)) is deferred]
c. And if GST Payable for the month of October is Rs.11,00,000 then,
GST Output A/c – Dr 11,00,000
To GST Input A/c – 7,20,000
To GST Payable A/c – 3,80,000
(So, Oct Deferred ITC of Rs.2,80,000 is available for adjustment)
For November 2019: –
a. Purchases A/c – Dr 44,44,000
GST Input A/c – Dr 8,00,000
To Creditors A/c – 52,44,000
b. And as illustrated above, if out of the total ITC of Rs.8,00,000 for the month of November, only Rs.5,00,000 ITC worth invoices were uploaded by the suppliers
Deferred GST Input (Nov’19) A/c – Dr 2,00,000
To GST Input A/c – 2,00,000
[Balance ITC of Rs.2,00,000 i.e. (8,00,000 – (5,00,000 + (5,00,000*20%)) is deferred]
And if GST Payable for the month of November is Rs.11,00,000 then,
GST Output A/c Dr – 11,00,000
To GST Input A/c – 6,00,000
To Deferred GST Input (Oct’19) A/c – 2,40,000
To GST Payable A/c – 2,60,000
[Adjusted Oct deferred ITC of Rs.2,40,000 (2,00,000+ (2,00,000*20%) = assume invoices for the ITC of Rs.2,00,000/- related to October’19 are also uploaded by supplier in November’19 out of Rs.10,00,000. So, Oct Deferred ITC of Rs.40,000 + Nov Deferred ITC of Rs.2,00,000 is available for adjustment]
For December 2019: –
a. Purchases A/c – Dr 38,88,000
GST Input A/c – Dr 7,00,000
To Creditors A/c – 45,88,000
b. And as illustrated above, if out of the total ITC of Rs.7,00,000 for the month of December, only Rs.4,00,000 ITC worth invoices were uploaded by the suppliers
Deferred GST Input (Dec’19) A/c – Dr 2,20,000
To GST Input A/c – 2,20,000
c. And if GST Payable for the month of December is Rs.7,60,000 then,
GST Output A/c – Dr 7,60,000
To GST Input A/c – 4,80,000
To Deferred GST Input (Oct’19) A/c – 40,000
To Deferred GST Input (Nov’19) A/c – 1,20,000
To GST Payable A/c – 1,20,000
[Adjusted Oct deferred ITC of Rs.40,000 (10,00,000-7,20,000-2,40,000)= assume invoices for the ITC of balance Rs.2,00,000/- related to October’19 are also uploaded by supplier in December’19 out of Rs.10,00,000 & Adjusted November deferred ITC of Rs.1,20,000 (1,00,000+ (1,00,000*20%)= assume invoices for the ITC of Rs.1,00,000/- related to November’19 are also uploaded by supplier in December’19 out of Rs.8,00,000. So, Nov Deferred ITC of Rs.80,000 is available]
For further details please refer to the original notifications/circulars.
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