Central Board of Indirect Taxes and Customs (CBIC) has issued Circular No. 123/42/2019 dated 11th November, 2019 to provide clarifications on restriction on availment of input tax credit (ITC) under sub rule 4 of Rule 36 of the CGST Rules, 2017 where it has been stated that, the amount of ITC in respect of the invoices/debit notes whose details have not been uploaded by the suppliers shall not exceed 20% of the eligible ITC available to the recipient in respect of invoices or debit notes the details of which have been uploaded by the suppliers in Form GSTR-1.
Key points of the Circular are:
- The restriction of Rule 36(4) will be applicable only on the invoices / debit notes on which credit is availed after 9th day of October, 2019.
- It has been clarified, that the restriction is not imposed through the common portal and it is the responsibility of the taxpayer that credit shall be availed on self-assessment basis.
- It has been clarified, that restriction of availment of ITC is imposed only in respect of those invoices / debit notes, details of which are required to be uploaded by the suppliers in GSTR-1 and which have not been uploaded. Therefore, taxpayers may avail full ITC in respect of IGST paid on import, documents issued under RCM, credit received from ISD etc. which are outside the ambit of Section 37(1), provided that eligibility conditions for availment of ITC are met in respect of the same.
- It has further been clarified, that restriction imposed is not supplier wise. The credit available under sub-rule (4) of rule 36 is linked to total eligible credit from all suppliers against all supplies whose details have been uploaded by the suppliers. Further, the calculation would be based on only those invoices which are otherwise eligible for ITC. Accordingly, those invoices on which ITC is not available under any of the provision Section 17(5) of the CGST Act, 2017 would not be considered for calculating 20 per cent. of the eligible credit available.
- It has been clarified, the taxpayer may have to ascertain the same from his auto populated FORM GSTR 2A as available on the due date of filing of FORM GSTR-1.
- It has further been clarified through an illustration involving various cases in a tabulated form as mentioned below the eligible amount of ITC that can be availed:
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 day of November, 2019.
| 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 GSTR-3B to be filed by 20th November, 2019 | |
| Case I | 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/- | 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 II | 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/- | Rs 7,00,000 + Rs. 1,40,000 = Rs. 8,40,000/- |
| Case III | Suppliers have furnished 75 invoices in FORM GSTR-1 having 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/- | 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. |
- 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.
For further details please refer the attached document.
Source: Central Board of Indirect Taxes & Customs
