Backdrop of Rule 36(4) of CGST Rules, 2017: –

The emphasis of the provision is to restrict the ITC claimed by registered person in GSTR 3B whose corresponding details of sales have not been uploaded on GST Portal by supplier in his GSTR – 1 (i.e. GSTR – 1 have not been filed by supplier) thereby not visible to the recipient in its GSTR – 2A (Auto-populated return).

(1) Understanding Rule 36(4) of CGST Rules (Notification No. 49/2019 – CT dated 9th October, 2019 read with Notification No. 75/2019 – Central Tax dated 26th December, 2019): –

As per Rule 36(4) of CGST Rules, 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 10 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.

(2) Suspension brought in to provide reliefs to businesses amidst COVID – 19

Understanding the need of hour, CBIC has provided relaxation in compliance with Rule 36(4) of CGST Rules vide Notification No. 30/2020 – CT, dated 3rd April, 2020 as under: –

“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.”.

Thus, the government required a registered person to make cumulative adjustments on account of 36(4) for the month of February, March, April, May, June, July, August, 2020 in the month of return of September, 2020. Thus, while filing the returns for September, 2020 businesses shall be very cautious to abide by Rule 36(4) cumulatively for the months of February, 2020 to August, 2020.

Let us elucidate & analyse in detail the same in below paras.

(It is assumed that, a registered person has not followed rule 36(4) of CGST Rules, 2017 for the months of February, 2020 to August, 2020)

Supposingly, the ITC for the months of February, 2020 to August, 2020 as per Books is Rs. 25,00,000/- The ITC for the month of September, 2020 is Rs. 3,00,000.

ITC reflecting as per GSTR 2A is Rs. 24,00,000 cumulatively for the period February, 2020 to September, 2020.

The claim for ITC in the month of September, 2020 shall be worked out as below: –

Particulars Amount
Eligible ITC as per Books of Accounts for the period Feb, 2020 to August, 2020 25,00,000
Eligible ITC for the month of September, 2020 3,00,000
Total ITC as per books of Accounts 28,00,000
ITC on GST Portal as per GSTR 2A as on 11th October, 2020 (i.e. Feb, 2020 to Sep, 2020) 24,00,000
+ Provisional as per Rule 36(4) (10% of Eligible ITC) 2,40,000
Total ITC should have been availed for period Feb to September, 2020 26,40,000
ITC already claimed till Feb to Aug [as per books ITC has been fully availed without following 36(4)] 25,00,000
Difference (ITC which can be availed in the return for the month of September, 2020)

(ITC for remaining amount of Rs. 1,60,000 has to be claimed as and when suppliers amounting to ITC of Rs. 1,45,454.5 file the returns)

1,40,000

Notes: –

The restriction of Rule 36(4) applies on consolidated basis & not invoice basis.

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4 Comments

    1. Keval Mota says:

      If a taxpayer has registered from September, the suspension provision does not apply to him as suspension provision applies on Gstr 2a from Feb to August. Normal Rule 36(4) shall be complied by your client.

  1. Amar says:

    Please clear me of
    1. ITC on GST Portal as per GSTR 2A as on 11th October, 2020 (i.e. Feb, 2020 to Sep, 2020)
    or
    2. Eligible ITC on GST Portal as per GSTR 2A as on 11th October, 2020 (i.e. Feb, 2020 to Sep, 2020)

    because in GSTR 2A there will be eligible and non eligible ITC.

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