Sub-rule (4) to rule 36 of the Central Goods and Services Tax Rules, 2017 (hereinafter referred to as the CGST Rules) provide restriction in availment of input tax credit (ITC) in respect of invoices or debit notes, the details of which have not been uploaded by the suppliers under sub-section (1) of section 37of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the CGST Act).
The Central Board of Indirect Taxes and Customs (CBIC) has issued Circular No. 123/42/2019- GST dated 11th November 2019 (F. No. CBEC – 20/06/14/2019 – GST) clarifying such Restriction.
The key summary of the circular has been given below for easy understanding:
| 1. | This is a clarification to the Notification No 49/2019-Central Tax dated 9th October 2019 and should be read in consonance with the said Circular. |
| 2. | The restriction does not apply to the following category of Input Tax Credits a. IGST Paid on Imports b. ITC availed for documents issued under RCM c. Credits received from Input Service Distributor (ISD) |
| 3. | The restriction is only against ITC availed on invoices/debit notes after 9th October 2019 and not before that period. |
| 4. | The GSTN Common Portal shall not put any system restriction based on the above circular. The restriction is to be computed on self-assessment basis. |
| 5. | All other conditions and eligibility for availing ITC shall be governed by CGST Act, 2017 (Chapter – V) and Rules made there under. This being an additional condition for availment of credit. |
| 6. | Restriction shall not apply for each supplier but shall be on consolidated value of invoices (i.e. total value of invoices not on count of suppliers |
| 7. | ITC shall not get lapsed if ITC is not availed in Current month/period but same may be availed in subsequent month/period. However, care must be taken to avail the same within the time period specified as per CGST Act, 2017 and Rules made thereunder |
| 8. | The taxpayer may have to ascertain the eligible ITC based on auto populated FORM GSTR 2A as available on the due date of filing of FORM GSTR-1 under sub-section (1) of section 37. Hence, if supplier delays in filing GSTR 1 beyond due date, ITC may not be available and same may have to be restricted at 20% of the eligible ITC available as per GSTR 2A |
| 9. | GSTR 2A being a dynamic document, taxpayers have to down load GSTR 2A on due date of filing GSTR 1 by suppliers (i.e. 11th of subsequent month for suppliers who file monthly return and 31st January 2020 (for Oct to Dec 2019) & 30th April 2020 (for Jan to Mar 2020). |
| 10. | At any time the total ITC availed (Auto Populated as per GSTR 2A and 20% of those auto populated one) should not exceed total eligible ITC of the taxpayer (Refer to illustrations) |
Illustration to explain the restriction and how it works –
A taxpayer “R” receives 100 invoices (for inward supply of goods or services) involving ITC of Rs. 10 lakhs, from various suppliers during the month of Oct, 2019 and has to claim ITC in his FORM GSTR-3B of October, to be filed by 20th Nov, 2019.
| 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 invoiceshaving 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. |
| 11. | It has also further been clarified, that balance ITC may be claimed by the taxpayer in any of the succeeding months provided details of requisite invoices are uploaded by the suppliers. Taxpayer can claim proportionate ITC as and when details of some invoices are uploaded by the suppliers provided that credit on invoices, the details of which are not uploaded in GSTR-1 remains under 20 per cent of the eligible input tax credit, the details of which are uploaded by the suppliers. Full ITC of balance amount may be availed, in present illustration by “R”, in case total ITC pertaining to invoices the details of which have been uploaded reaches Rs. 8.3 lakhs (Rs 10 lakhs /1.20). In other words, taxpayer may avail full ITC in respect of a tax period, as and when the invoices are uploaded by the suppliers to the extent Eligible ITC/ 1.2. |
