Restriction in availing of input tax credit in terms of sub-rule (4) of rule 36 of CGST Rules, 2017

Sub-rule (4) to rule 36 of the Central Goods and Services Tax Rules, 2017 (hereinafter referred to as the CGST Rules) has been inserted vide Notification No. 49/2019- Central Tax, dated 09.10.2019. The said sub-rule provides a restriction in availing 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).

Changes and Clarifications on ITC Claim in Return GSTR-3B [Insertion of Rule 36(4) w.e.f. 9-10-2019

Circular No. 123/42/2019– GST Dated 11-11-2019] Restriction in availment of input tax credit in terms of sub-rule (4) of rule 36 of CGST Rules, 2017

1)What are the invoices/ debit notes on which the restriction under rule 36(4) of the CGST Rules shall apply?

Restriction in respect of those invoices/debit notes, details of which are required to be uploaded by the suppliers under sub-section (1) of section 37and 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 sub-section (1) of section 37, provided that eligibility conditions for availing of ITC are met in respect of the same. The restriction of 36(4) will be applicable only on the invoices / debit notes on which credit is availed after 09.10.2019.

2)Whether the said restriction is to be calculated suppliers or consolidated basis?

The 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 (say under sub-section (5) of section17) would not be considered for calculating 20 percent. of the eligible credit available.

3) FORM GSTR-2Abeing a dynamic document, what would be the amount of input tax credit that is admissible to the taxpayers for a particular tax period in respect of invoices/ debit notes whose details have not been uploaded by the suppliers?

The amount of input tax credit in respect of the invoices/debit notes whose details have not been uploaded by the supplier shall not exceed 20% of the eligible input tax credit available to

the recipient in respect of invoices or debit notes the details of which have been uploaded by the suppliers under subsection(1) of section 37 as on the due date of filing of the returns in

FORM GSTR-1 of the suppliers for the said tax period. The taxpayer may have to ascertain the same from his auto-populated from GSTR 2A as available on the due date of filing of FORM GSTR-1 under sub-section (1) of section 37.

4) How much ITC a registered taxpayer can avail in his FORM GSTR-3B ina month in case the details of some of the invoices have not been uploaded by the suppliers under subsection (1) of section37.

Sub-rule (4) of rule 36 prescribes that the ITC 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 subsection(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 subsection(1) of section 37. The eligible ITC that can be availed is explained by way of illustrations, in a tabulated form, below. In the illustrations, say a taxpayer “R” receives 100 invoices (for the inward supply of goods or services) involving ITC of Rs.10 lakhs, from various suppliers during the month of Oct, 2019and has to claim ITC in his Form GSTR-3B of October