pri Rule 36(4) amended to reduce ITC entitlement from 10% to 5%   Rule 36(4) amended to reduce ITC entitlement from 10% to 5%  

Rule 36(4) amended to reduce ITC entitlement for invoices not furnished by supplier from 10% to 5%  

The CBIC vide Notification No. 94/2020-Central Tax dated December 22, 2020 has issued Central Goods and Services Tax Rules (Fourteenth Amendment), 2020, inter alia, amending Rule 36(4) of the Central Goods and Services Tax Rules, 2017 (CGST Rules), w.e.f. January 1, 2021 in following manner:

  • The restriction of claim of Input Tax Credit (“ITC”) in respect of invoices/debit notes not furnished by the suppliers has now been reduced from 10% to 5% of the credit available in GSTR 2B.
  • Substituted the word “furnished” in place of the word “uploaded”
  • Inserted the words “in FORM GSTR-1 or using the invoice furnishing facility” after the words, brackets and figures “by the suppliers under sub-section (1) of section 37” to align it with the Invoice Furnishing Facility (“IFF”) introduced vide Notification No. 82 /2020-Central Tax dated November 10, 2020.

Rule 36(4) of the CGST Rules effective from January 1, 2021 will read as under:

“(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 furnished by the suppliers under sub-section (1) of section 37 in FORM GSTR-1 or using the invoice furnishing facility, shall not exceed 5 per cent of the eligible credit available in respect of invoices or debit notes the details of which have been furnished by the suppliers under sub-section (1) of section 37 in FORM GSTR-1 or using the invoice furnishing facility

Provided that the said condition shall apply cumulatively for the period February, March, April, May, June, July and August, 2020 and the return in FORM GSTR-3B for the tax period September, 2020 shall be furnished with the cumulative adjustment of input tax credit for the said months in accordance with the condition above.”

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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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