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.