CBIC has issued Circular No. 123/42/2019–GST dated 11th November 2019 clarifying Restriction in availment of input tax credit in terms of sub-rule (4) of rule 36 of CGST Rules, 2017.
The key summary of the circular has been given below for easy understanding:
What Businesses should do to align with the changes –
Illustration to explain the restriction and how it works –
Scenario | Details of suppliers’ invoices for which recipient is eligible to take ITC | 20% of eligible credit where invoices are uploaded | Eligible ITC to be taken in GSTR3B to be filed by 20th Nov. |
Case 1 | Suppliers have furnished in FORM GSTR-1 80 invoices involving ITC of Rs. 6 lakhs as on the due date of furnishing of the details of outward supplies by the suppliers. | Rs 1,20,000 (20% of Rs 6 Lakhs) | Rs. 6,00,000 (i.e. amount of eligible ITC available, as per details uploaded by the suppliers) + Rs.1,20,000 (i.e. 20% of amount of eligible ITC available, as per details uploaded by the suppliers) = Rs. 7,20,000/- |
Case 2 | Suppliers have furnished in FORM GSTR-1 80 invoices involving ITC of Rs. 7 lakhs as on the due date of furnishing of the details of outward supplies by the suppliers. | Rs 1,40,000 (20% of Rs 7 Lakhs) | Rs 7,00,000 + Rs. 1,40,000 = Rs. 8,40,000/- |
Case 3 | Suppliers have furnished in FORM GSTR-1 75 invoices having ITC of Rs. 8.5 lakhs as on the due date of furnishing of the details of outward supplies by the suppliers | Rs 1,70,000 (20% of Rs 8.50 Lakhs) | Rs. 8,50,000/- + Rs.1,50,000/-* = Rs. 10,00,000
* The additional amount of ITC availed shall be limited to ensure that the total ITC availed does not exceed the total eligible ITC. |
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The invoices of Regtd. Input Service Distributor, who is filing returns quarterly, is not reflecting in GSTR2A. How can I avail ITC on those Invoices?
Hi Ambika,
Same shall be claimed by filing GSTR 6 and the entries shall auto populate in GSTR 6A. The above restriction does not apply to Credits pertaining to ISD Credits.
Sir,
We have done Import in the month of July 2017 and wwe got out firm registered with GST in Aug’2017.
I heard that we can avail IGST paid on imports and request you to clarify and provide the circular no.
We are dealing with Govt civil works contracts and the department people are deducting GST TDS @ 2% on work done. Shall we take it as input tax credit. since they are deducting the TDS for Oct 18 FY 2018-19 and 2019-20. But it is not showing in our 2A, Please clarify sir.
Dear Sir,
The GST TDS Deducted has to be claimed by filing GSTR 7. you may follow below path for viewing your TDS Credit –
Dashboard – Services – Returns – TDS and TCS Credit Receivable – proceed to view and confirm your TDS Credit
We may assist you in claiming your TDS Credit. You may call me at 9503031788 or mail me at fcsrohit@gmail.com
Regards
Rohit
iam little confused , can i claim igst paid on imports .
Hello sir,
If the IGST paid on imports is an eligible Credit, you may claim same via your GSTR 3B (ITC table). You need to pay IGST on Imports and same may be availed as ITC
Will this make the ITC unavailable for the dealers, whose suppliers are filing quarterly GSTR-1? In such cases, the dealer will be able to take ITC claim for Oct. – Dec. 2019, after the supplier has filed the GSTR-1 (by 31st Jan. 2020), only in Feb. 2020 while filing GSTR-3B for Jan. 2020. Sir, please clarify.
Dear Sir, such clarification is awaited. But you may still claim ITC provided such quarterly filing value of invoices fall within 20% limit. Ask the supplier to upload the invoices and save the return. Such invoices shall reflect in your 2A.
It looks impractical. The GST Portal either needs to freeze the data at the end of due date of filing of GSTR-1 or provide the date of uploading/filing of the return. Further its difficult for the dealer, to judge the due date of GSTR-1 of the supplier.
is the restriction of 20% shall apply to Banking company which is following Rule 38 are not
Hi Satheesh,
Yes the restriction shall apply to banking companies as well. The 20% rule shall apply on eligible ITC
Regards
Rohit