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The CBIC vide Notification No. 94/2020-Central Tax, dated December 22, 2020 has issued Central Goods and Services Tax Rules (Fourteenth Amendment), 2020, inter alia, amending Rule 138 of the Central Goods and Services Tax Rules, 2017 (CGST Rules), w.e.f. January 1, 2021, in following manner

Rule 36, Input Tax Credit  restriction on invoices not furnished by  vendor in their Form GSTR 1

Input Tax Credit  claim in respect of invoices which are not uploaded by    vendor  in their Form GSTR 1 or through Invoice Furnishing Facility (‘IFF’) will be allowed maximum up to 5% (currently it is 10%) of the invoices furnished by the vendors in their Form GSTR 1/ through IFF Facility

Example :

Sl No Particulars Now New
I Eligible ITC  as per  Purchase register 10,000 10,000
II Eligible ITC available in the GSTR-2A 8,000 8,000
III ITC that can be claimed as the provisional credit (10 % / 5% of II) 800 400
IV = II+III Total ITC that can be claimed in the GSTR-3B 8,800 8,400
V = I-IV ITC not allowed in the GSTR-3B 1,200 1,600

Rule 59 ,Blocking to file  Form GSTR-1 for  failure to file Form GSTR-3B in two consecutive tax period

  • Form GSTR 1 would not be allowed to be filed where a taxpayer fails to file Form GSTR 3B for two subsequent months . Example if the  regular tax payer fails to file GSTR 3b in the month of January 2021, February  2021 then the tax Payer will not able to file GSTR 1 for the month of March 2021.
  • Same way , for quarterly return filers, the taxpayer fails to file Form GSTR 3B for the preceding quarter shall not be allowed to furnish outward supplies in Form GSTR 1 or using IFF of the subsequent quarter / tax period .

Changes in Rule 86B : Applicable to selected Taxpayers shall pay 1% of the total tax liability in Cash

Taxpayers whose value of taxable supplies other than exempt supply and zero-rated supply exceeds Rs 50 lakhs in a month can use maximum 99% of the output tax liability from ITC available in the electronic credit ledger. In other words, 1% would be required to be paid in cash

The above restriction would not be applicable in the below cases:

1) Taxpayers who have paid Income Tax of more than Rs. 1 lakh in each of the two preceding financial years (income tax section 139 (1) with the time limit

2)  Taxpayers have claimed refund of more than Rs. 1 lakh on zero-rated supplies or inverted duty structure in the preceding financial year

3) Taxpayers have paid tax in cash/bank cumulatively exceed 1% of the total liability till the relevant month

4) Government Department, Public Sector Undertaking (PSU), local authority or a statutory body

 Rule 138 Amendment  in E-way bill provision and generation of E- way bill

  • E-way bill will not allowed to generate where the GST returns for two tax periods are not filed by the taxpayer
  • The Tax payer  / Persons whose registration has been suspended will be not allowed for  generating Eway bill
  • E-way bill or a consolidated e-way bill valid for one day, which was earlier valid for distance up to 100 km has now been enhanced to 200 km.

Example : let us say that a dispatch to the destination (located at a distance of 550 kms) has taken place on 01.01.2021. As per the existing rule, the validity of the E-way bill generated on 01.01.2021 would have expired on 07.01.2021(i.e. one day for 100 km starting from the midnight of the generation of the E-way bill). Now as per the amendment, the same will expire on 04.01.2021 and hence the goods must reach the destination within the said time frame.

Alternatively, an extension can be sought (within the prescribed time), but difficult to get, for special reasons if the vehicle has not been able to reach the destination within the validity of the E-way bill.

The relevant notification  : Notification No. 94 /2020 – Central Tax  dated : 22nd December 2020

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

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