Notification No. 49/2019 – Central Tax dated 9 October 2019 has announced a major change in availment of Input Tax Credit (‘ITC’) while filing monthly GST returns.

Section 43(A) of CGST Act, 2017 (‘the Act’) and the recent amendment in rule 36 of the CGST Rules, 2017 provides that an assesse can claim twenty percent of eligible ITC on inward supplies for which details have not been furnished by the outward supplier in its GSTR 1.

The same can be explained as under;

S. No. Particulars CGST SGST IGST
1. Total ITC as per GSTR 2A of assesse        100,000        100,000        120,000
2. Eligible ITC as per GSTR 2A of assesse           80,000           80,000        110,000
3. 20% of eligible ITC           16,000           16,000           22,000
4. Maximum ITC availment as per recent amendment           96,000           96,000         132,000
5. Available ITC as per Purchase register of assesse        120,000        120,000        130,000
6. Total ITC which assesse can claim 96,000 96,000 130,000

This amendment would lead to additional compliances for the companies enumerated as under:

  • Monthly reconciliation of GSTR 2A and Purchase register
  • Follow up with the vendors for uploading the invoices on monthly basis
  • Classification of eligible and ineligible credit in the GTSR 2A
  • Impact on working capital and cash flow
  • Would lead to additional compliance burden this month, as reconciliation for missed credit for FY 2018-19 also needs to be calculated and incorporated in GSTR 3B

Author’s view:

This amendment would lead to additional burden to the companies. The ITC availment prior to this was assesse friendly as the reconciliation of missed ITC was to be made at asessees’s ease (majorly annually) and not monthly as introduced by this amendment.

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Qualification: CA in Job / Business
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Location: PUNE, Maharashtra, IN
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4 Comments

  1. Sourabh Goyal says:

    Dear Ma’am,
    Please elaborate your given example.
    How can Assessee can claim Input of IGST of Rs. 1,30,000/- out of Rs. 1,10,000/- eligible ITC available in GSTR 2A.

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