In this article, we have discussed about the Input Tax Credit (ITC) compliances and procedure related to Reversal of ITC in case of non-payment, ITC Restriction, Blocked Credit under Section 17(5) of the CGST Act that has to be followed by the registered taxpayers under the provisions of the GST Law as on March 31, 2021.

3 Important ITC related compliance as on March 31, 2021

Topic Particulars Date
Reversal of ITC in case of non-payment As per Section 16(2) of the CGST Act, where payment against purchase of goods or services or both has not been made by the recipient to the supplier of such goods or services or both within a period of 180 days from the date of issuance of invoice, ITC availed by the recipient on such purchase has to be reversed by adding the same to his output tax liability along with applicable interest @18% PA. Therefore, the recipient shall track the records of the invoices on which consideration has not been paid and take the needful actions accordingly.

 

180 days from the date of issuance of invoice
ITC Restriction Rule 36(4) of the CGST Rules had been amended vide Notification No. 94/2020-Central Tax dated December 22, 2020 to restricts the credit relating to the invoices/DN not uploaded by the suppliers in their Form GSTR-1 to the extent of 5% of eligible ITC coming in GSTR 2A of the Recipient.

Further, this restriction is not imposed through the common portal and it is the responsibility of the taxpayer that credit availment of restricted credit in terms of the Rule 36(4) of the CGST Rules shall be done on self-assessment basis by the taxpayers.

Therefore, the taxpayer needs to track monthly reconciliation of purchases made along with ITC availed as per GSTR 2A and GSTR 3B for proper availment of ITC.

 
Blocked Credit under Section 17(5) of the CGST Act Reversal of credit is required to be made in case of goods lost, stolen, destroyed, written off etc., as ITC attributable to such goods shall be reversed. Also, such blocked credit needs to be identified and the ITC needs to be reversed along with interest.

As per Notification No. 13/2017 – central tax/ notification no. 6/2017 – integrated tax, both dated 28.06.2017, applicable rate of interest under Section 50(1) of the CGST Act is 18% per annum.

March 31, 2021

Abbreviations:

Central Goods and Services Tax Act, 2017 (“CGST Act”)

Central Goods and Services Tax Rules, 2017 (“CGST Rules”)

Input Tax Credit (“ITC”)

Goods and Services Tax (“GST”)

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DISCLAIMER: The views expressed are strictly of the author and A2Z Taxcorp LLP. The contents of this article are solely for informational purpose. It does not constitute professional advice or recommendation of firm. Neither the author nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon.

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