Restriction on availment of the input tax credits (ITC) not appearing in form GSTR-2A

In a major move to linked the ITC of the recipient with the payment of the taxes by the suppliers of the services, Government of the India, Ministry of the Finance vide notification number 49/2019-Central Tax dated 09th October 2019, has amended Central Goods and Service Tax Rules 2017.

As per the said rules, in rule 36, after sub-rule (3), the following sub-rule (4) has been inserted:

“(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 percent 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.”

Meaning thereby, now ITC in respect of invoices/ debit notes not uploaded by suppliers (i.e. not appearing in form GSTR-2A) cannot be avail in excess of 20% of the eligible ITC pertaining to invoices / debit notes uploaded by the suppliers. Following is the illustrative example for better understanding:

Particulars Actual ITC Eligible ITC after amendment
Say total input amount for the month is Rs. 1000
ITC appearing in form GSTR-2A of GST portal 600 600 [No change]
ITC not appearing on GST portal in GSTR-2A 400 600*20% = 120; or
400, whichever is lower i.e. 120
Total eligible ITC to be claimed in GSTR-3B for the month 720
Restricted ITC under Rule 36(4) 400-120 =280

After the amendment in regulations, assessee should review their existing system of filing monthly GSTR-3B returns. Now assessee should incorporate monthly reconciliation of the ITC register with ITC as appearing in form GSTR-2A and communicate the discrepancies with their vendors, in order to avoid delay in GST input tax credit and blocking working capital.

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23 Comments

  1. ISHA LAMBA says:

    if suppose our itc is Rs 10.5 lakhs and in Gstr 2a itc disclose is Rs. 10 lakshs and only 50000 is not shown then how this 20% amendment is applicable.

  2. Sundari says:

    Day by day, GST Returns and Refunds getting more complicated. By availing 20% input, totally confusing and with no fault on buyer, buyer has to suffer more.
    Government should take move to simply the process so that each and every dealer file a return without any cumbersome.

  3. kamal says:

    This Govt is making Tax Terror and no simplification. Directors had to comply with DIR KYC but the site was not working. OTPs were not received in a largi number of cases. The server was down and now the Govt is asking for payment of late fee of Rs. 5000. Is it India?

    1. rajiv says:

      agreed – must w.e.f from july2017,the gst returns compliance must be very low as % of total dealers in business.the jargon seamless inputs ruined the gst compliance and slowed business growth by recession in all sectors of economy.

  4. Dolly says:

    Why should businessman suffer even if they pay gst to their supplier.
    What is the effective date of implimentation of this rule of availing itc from oct.19 or sept.19

  5. Sushil Sureka says:

    GST, which could have been a wonderful system, has been ruined because of complexities. And this complex nature is the root cause of noncompliance. Instead of addressing this, the Council continues to make things more and more complicated. This 20% restriction will create huge issues in return filing as also blocking up of capital of honest dealers.
    Sushil Sureka,
    Ahilya Chamber, Indore

  6. Rajendran Nair T says:

    The new GST system of taxation was introduced with the intention to simplify the tax structure.Now,it seems that each and every circular / direction /decision of Government comes out with the intention to make the GST system more difficult and annoy the business people.They are ready to co-operate with the GST system of taxation,but the Government has been making/amending/modifying the procedures and Rules regularly as if they are finding happiness by seeing the utter confusion and chaos being happened in the business community.For example,the introduction of restriction on availing of ITC not appearing in 2A.
    the recipient should not be penalized for the in activeness on the part of suppliers.They must be punished for uploading the details in the 2A suppressing vital information deliberately or not which in turn make unnecessary harassment on recipients.

  7. Biju says:

    In that case if the difference of Rs.400 ITC not availed in the current month we can claim ITC only of Rs. 120 but that Rs. 400 ITC reflected in GSTR2A in next month then we can claim balance Rs. 480 fully, correct?

  8. RAMESH says:

    Some customers filing quarterly GSTR 1. But we file monthly how to consider the ITC amount. Whether we have to keep pending and claim when it reflect in GSTR 2A or take 20% and claim 80% later. Please explain in details

  9. KAMLESH BAROD says:

    Why should the buyers suffer for supplier not filling GSTR1 return,buyer has paid GST to the supplier.

    also some supplier filled the quarterly return and quarterly return data not match with our monthly purchase register and every month mismatch data cary forwarded to next month

  10. Vishal S H says:

    These overnight changes in GST Amnd will impact business community during this recession times.
    So, Instead of catching the defaulted vendors who have not filed their returns & pay taxes. Why should genuine supplier should suffer due to this ITC Amnd.

  11. PAPPANNAN RANGARAJ RAJENDRAN says:

    This is the injustice imposed on Genuine dealers and practitioners.Instead of make the suppliers to file GSTR1 and GSTR3B,the inefficient Authority impose punishment on Dealers.First of all reduce the Late fee to the minumum level to the maximum of Rs.2000 for the a GSTR3B return.This is the very effect of fear on late fees against filing returns.

    Let the Govt avail the guidance of Senior Experts with out biased approach.Then only these problems will be sort out.

    1. J.SRINIVASARAGHAVAN says:

      Sirs,
      In the GST ACT – GSTR 1 = STATEMENT & GSTR 2, 2A = STATEMENT
      GSTR 3 – is only one return GST ACT.
      GSTR 3B is a consolidated tax form.
      AS PER ACT WHICH IS THE correct GSTR RETURN ?
      BUT FINE IMPLEMENTED so many forms GSTR 3B,GSTR 9, GSTR 9A,GSTR 1, GSTR 9C, GSTR 2, etc.,
      WHY ?

  12. ashok kumar gupta says:

    why the govt. creating problems for business which are already down .by introducing new systems .they are going to implement direct up load of bills from January 2020 though on trial basis .for the gap of two months creating new hurdles instead it is better to claim when bills are loaded and reflected in 2A

  13. CA NARENDRA SEKSARIA says:

    WHY ONLY /ADHOC 20 PERCENT WHY NOT 50/100-PL PL NOT CREATE NEW PROBLEMS
    -BETTER SEND SOFT LANDING NOTICES FOR FY2017-18 -FY18-19 BY SYSTEM-BIG DIFF FOLLOW UP VIGROUSLY TO CATCH BOGUS EARLIEST -=ALREADY DELAYED

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