Input Tax Credit restriction – Rule 36(4) of CGST Rules, 2017 inserted vide Notification No. 49/2019 dated 09th Oct, 2019 and it was made applicable w.e.f. 09th Oct, 2019.
Relevant extract of said notification is reproduced as under: –
In the said rules, in rule 36, after sub-rule (3), the following sub-rule shall be inserted, namely: –
“(4) 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.”.
– This is very significant to understand the provisions of newly inserted rule 36(4) of CGST Rules, 2017. For this purpose, information mandatorily required are as under:
– For better understanding we have to first go through the provisions of Section 37(1) of CGST Act, 2017.
Shall furnish the detail of “outward supplies” in form GSTR-1 on or before 10th of the succeeding the tax period.
Further, detail reflected in GSTR-1 shall be auto populated in GSRT-2A of the recipients of the supply.
– Meaning of “eligible credit”: –
– The provisions of rule 36(4) of CGST Rules, 2017 are discussed herein below: –
Example 1: – In the month of Oct, M/s. LNG has 50 invoices (for inward supplies of Goods or Services) of ITC amounting Rs.5 lacs from various suppliers and same is the eligible credit. Further, M/s. LNG provided only taxable supplies and no ITC pertains to the non-business activities.
Case -1: – Invoices are uploaded by suppliers ITC amounting to Rs.3 lacs in Oct, Rs.1 Lac in Nov and Rs.0.50 lac in Dec.
Case -2: – Invoices are uploaded by suppliers ITC amounting to Rs.3.50 lacs in Oct, Rs.0.50 Lac in Nov and Rs.1 lac in Dec.
Case -3: – Invoices are uploaded by suppliers ITC amounting to Rs.4.25 lacs
Solution: –
S.No. | Particulars | Case -1 | Case -2 | Case -3 |
1 | Eligible ITC reflected in GSRT-2A | Rs.3,00,000/- | Rs.3,50,000/- | Rs.4,25,000/- |
2 | 20% of eligible ITC | Rs.60,000/- | Rs.70,000/- | Rs.85,000/- |
3 = 1+2 | Total ITC to be taken in GSTR-3B in Oct | Rs.3,60,000/- | Rs.4,20,000/- | Rs.5,10,000/- but limited to Rs.5,00,000/- |
4 | ITC relevant to the m/o Oct to be taken in GSTR-3B in Nov | Rs.1,20,000/- ((1.2*(3+1)-3.6)) | Rs. 60,000/- ((1.2*(3.5+0.5)-4.2)) | NIL |
5 | ITC relevant to the m/o Oct to be taken in GSTR-3B in Dec | Rs. 20,000/- | Rs. 20,000/- | NIL |
6 | Total Credit to be availed (3+4+5) | Rs.5,00,000/- | Rs.5,00,000/- | Rs.5,00,000/- |
Example: 2- In the month of Oct, M/s. LNG has 100 invoices (for inward supplies of Goods or Services) of ITC amounting to Rs.10 lacs from various suppliers. Further, M/s. LNG has provided both taxable & exempted suppliers.
ITC to be reversed under rule 42 of CGST Rules, 2017 is Rs.0.35 lacs and ineligible credit of Rs.1.20 lacs u/s 17(5).
In this situation, Rs.8,80,000/- is eligible credit and Rs. 35,000/- ITC to be reversed. Hence, net ITC to be availed is Rs.8,45,000/-
Case -1: – Invoices are uploaded by suppliers ITC amounting to Rs.6 lacs (Rs.0.60 lac ineligible) in Oct, Rs.1.50 Lac (Rs.0.25 lac ineligible) in Nov and Rs.1.5 lac (Rs.0.15 lac ineligible) in Dec.
Case -2: – Invoices are uploaded by suppliers ITC amounting to Rs.7 lacs (Rs.0.70 lac ineligible) in Oct, Rs.0.90 Lac in Nov (Rs.0.20 lac ineligible) and Rs.2 lacs (Rs.0.30 lac ineligible) in Dec.
Case -3: – Invoices are uploaded by suppliers ITC amounting to Rs.8.50 lacs in Oct (Rs.1.00 lac ineligible)
Solution: –
S.No. | Particulars | Case -1 | Case -2 | Case -3 |
1 | Eligible ITC reflected in GSRT-2A less ineligible | Rs.5,40,000/-
(6.00 – 0.60) |
Rs.6,30,000/-
(7.00 – 0.70) |
Rs.7,50,000/-
(8.50 – 1.00) |
2 | 20% of eligible ITC | Rs.108,000/- | Rs.126,000/- | Rs.150,000/- |
3 | ITC to be reversed u/r 42 | Rs.35,000/- | Rs.35,000/- | Rs.35,000/- |
4 = 1+2-3 | Total ITC to be taken in GSTR-3B in Oct-19 | Rs.6,13,000/- | Rs.7,21,000/- | Rs.8,65,000/- but limited to Rs.8,45,000/- |
4 | ITC relevant to the m/o Oct-19 to be taken in GSTR-3B in Nov-19 | Rs.1,85,000/-
((1.20*(5.40+(1.50-0.25))-6.13)) |
Rs.1,19,000/-
((1.20*(6.30+(0.90-0.20))-7.21)) |
NIL |
5 | ITC relevant to the m/o Oct-19 to be taken in GSTR-3B in Dec-19 | Rs. 47,000/-
(8.45-6.13-1.85) |
Rs. 5,000/-
(8.45-7.21-1.19) |
NIL |
6 | Total Credit to be availed (4+5+6) | Rs.8,45,000/- | Rs.8,45,000/- | Rs.8,45,000/- |
Author can be reached: – LNG & Associates, Gurugram, calalitgupta@gmail.com , 9953307025
Disclaimer: -Views expressed in the Article are the personal views of the Author based on his interpretation of Law. Views expressed should not be construed as professional advice or legal opinion. Article needs to be revised and revisited on any clarifications, circulars or notifications released after the date of article. The author will not be responsible for any error, omission, commission and result of any action taken by participant or anyone on the basis of this article.
क्या यह नियम सही है ? इससे बेहतर तो GSTR 3B को हटाकर सभी वर्ग के व्यापारियों को अनिवार्य रूप से प्रतिमाह GSTR1 भरना लागू कर दिया जाना चाहिए इससे इतना झंझट ख़त्म हो जाएगा ओर यह सभी के लिए सरल ओ जाएगा, नाहक ही इसे क्रिटिकल बनाया जा रहा है |
यह नियम कब से हटेगा ?
Now as per due date supplier has not filed the GSTR-1 but he has filed late GSTR-1 with late fees now at the time of filing our GSTR 3 B itc is not reflected in our GSTR2 A but we have claim 20% ITC , now when we have to file further month GSTR 3B at the time it shows full ITC so we have to take balance is it ok so it is duty on receipeient part to check our purchases on supplier invoices also is it correct , pl suggest same to be check in case of credit notes and debit notes on various transactions
Sir,
While filing returns in November by mistake I updated amount in IGST column were I don’t have any transaction through IGST.
But the same I have reversed in month of January 2020.
Now I revised the notice and they telling to pay penalty. Is this liable or how it is please help me sir.
Has the notification published in Gazette?
yes, effective w.e.f. 09.10.19
Can we take the ITC of bills uploaded by the supplier and the same is showing in the GSTR 2A, in Counter Party Submit Status it is showing as- NO.
If counter party submit status No, it shows that these bills either don’t pertain to recipient of supplies or not accepted to the recipient of supplies. In this situation, these bills uploaded by suppliers do not become part of ITC. Hence you can’t take credit of the same.