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    Changes in Input Tax Credit Rule 36 (4) in GST

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    Kanhaiya RAthi
    The document discusses changes made by the GST committee to input tax credit rule 36(4) of the GST Act after October 9, 2019. Key changes include: 1. Registered persons can only claim up to 20% of the eligible input tax credit for invoices/debit notes that have not been uploaded by suppliers in their GSTR-1. 2. Monthly reconciliation of input tax credit is now mandatory, as credit can only be claimed for the month in which the invoice was received. Credit for invoices received in one month can no longer be claimed in subsequent months. 3. The 20% restriction and monthly reconciliation requirement are aimed at increasing compliance and ensuring that the full amount of input tax credit

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    Changes in Input Tax Credit Rule 36 (4) in GST

    Uploaded by

    Kanhaiya RAthi
    18 views4 pages
    The document discusses changes made by the GST committee to input tax credit rule 36(4) of the GST Act after October 9, 2019. Key changes include: 1. Registered persons can only claim up to 20% of the eligible input tax credit for invoices/debit notes that have not been uploaded by suppliers in their GSTR-1. 2. Monthly reconciliation of input tax credit is now mandatory, as credit can only be claimed for the month in which the invoice was received. Credit for invoices received in one month can no longer be claimed in subsequent months. 3. The 20% restriction and monthly reconciliation requirement are aimed at increasing compliance and ensuring that the full amount of input tax credit

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    Changes in Input tax credit Rule 36(4) in GST

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    GST Blog

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    The document discusses changes made by the GST committee to input tax credit rule 36(4) of the GST Act after October 9, 2019. Key changes include: 1. Registered persons can only claim up to 20% of the eligible input tax credit for invoices/debit notes that have not been uploaded by suppliers in their GSTR-1. 2. Monthly reconciliation of input tax credit is now mandatory, as credit can only be claimed for the month in which the invoice was received. Credit for invoices received in one month can no longer be claimed in subsequent months. 3. The 20% restriction and monthly reconciliation requirement are aimed at increasing compliance and ensuring that the full amount of input tax credit

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    18 views4 pages

    Changes in Input Tax Credit Rule 36 (4) in GST

    Uploaded by

    Kanhaiya RAthi
    The document discusses changes made by the GST committee to input tax credit rule 36(4) of the GST Act after October 9, 2019. Key changes include: 1. Registered persons can only claim up to 20% of the eligible input tax credit for invoices/debit notes that have not been uploaded by suppliers in their GSTR-1. 2. Monthly reconciliation of input tax credit is now mandatory, as credit can only be claimed for the month in which the invoice was received. Credit for invoices received in one month can no longer be claimed in subsequent months. 3. The 20% restriction and monthly reconciliation requirement are aimed at increasing compliance and ensuring that the full amount of input tax credit

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    Changes in Input tax credit Rule 36(4) in GST

    Today we will discuss very important changes done by the GST committee in the Input credit rule
    36(4) of the GST Act. In this we will also discuss Input tax Provision in GST Till 9th October 2019 or
    after 9th October 2019. In this blog we will also explain you the increase in compliance burden in the
    GST and why the monthly reconciliation in the GST is mandatory now.

    Input tax credit Provision in GST Till 9th October 2019


    Conditions and documents required for claiming input tax credit as per section 36(1).-

    The input tax credit shall be availed by a registered person, including the Input Service Distributor, on
    the basis of any of the following documents, namely,-

    a) an invoice issued by the supplier of goods or services or both in accordance with the provisions
    of section 31;

    b) an invoice issued in accordance with the provisions of clause (f) of sub-section (3) of section 31,
    subject to the payment of tax; https://cleartax.in/s/cgst-rules-chapter-6-tax-invoice-credit-and-
    debit-notes

    c) a debit note issued by a supplier in accordance with the provisions of section 34;

    d) a bill of entry or any similar document prescribed under the Customs Act, 1962 or rules made
    thereunder for the assessment of integrated tax on imports;

    e) an Input Service Distributor invoice or Input Service Distributor credit note or any document
    issued by an Input Service Distributor in accordance with the provisions of sub-rule (1) of rule
    54.

    (2) Input tax credit shall be availed by a registered person only if all the applicable particulars as
    specified in the provisions of Chapter VI are contained in the said document, and the relevant
    information, as contained in the said document, is furnished in FORM GSTR-2 by such person: (GSTR 2 is
    not enabled by department yet, hence in our opinion if other conditions are satisfied then you are
    eligible for ITC)
    Additional Input tax credit Condition in GST after 9th October 2019
    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 20
    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 (GSTR 1 Monthly – 11th of
    Succeeding month, Quarterly – Month end after quartier end)

    S.No Issue Clarification


    1. Which Invoice needs to be uploaded by Supplier Following Invoice need not to be uploaded
    by supplier –
     Import Bill of Entry
     Reverse Charge Payment
     Credit Recd from ISD
    Rest all invoiced need to be uploaded by
    supplier
    2. Restriction of 20% is Supplier wise or consolidated Restriction is on consolidated basis

    Further Calculation would be based on


    otherwise eligible invoices only, Blocked
    credit will not be considered

    Why Monthly Reconciliation in GST is Compulsory after 9th


    October 2019
    1. Credit to be taken in Credit Available in 2A - Blocked Credit – Invoice reflected in 2A but Goods or Service
    particular month Not received = Eligible Credit *120% subject to maximum ITC

    This exercise needs to be done every month and GSTR 1 should be filed within due
    date

    Suppose we are filing GSTR 3B for month Oct 2019, We have to verify 2A before
    filing GSTR 3B

    Quarterly filing Supplier’s recipients cannot avail their credit for supplies received
    during the month of Oct-19, Nov-19 and Dec-19 since their due date of filing GSTR-1
    is 31st Jan-19. Their credit can be availed only after 31st Jan 19 i.e. in GSTR-3B for
    the month Jan-19. This will lead to very high amount of credit blocked and cash
    outflow specially suppliers whose recipients are only SMEs and availing quarterly
    filing. This will increase reconciliation issue so we should suggest our supplier to
    adopt monthly GSTR filing

    e.g
    ABC Received 100 invoice involving ITC of Rs 15 lac in Oct 19 and they have to take
    credit in GSTR 3B of Oct by 20th November
    Case Details of suppliers’ 20% of eligible Eligible ITC to be taken in
    No invoices for which credit where GSTR-3B to be filed by 20th
    recipient is eligible invoices are Nov.
    to take ITC uploaded
    1 Suppliers have 10,00,000*20% = 12,00,000
    furnished in FORM 2,00,000
    GSTR-1 80 invoices Since we have not taken full
    involving ITC of Rs. credit we have to reconcile
    10 lakhs as on the and check further month 2A
    due date of also to ensure whether any
    furnishing of the credit relating to particular
    details of outward month e.g. Oct 19 is reflected
    supplies by the subsequently
    suppliers.

    2 Suppliers have 13,00,000*20% 13,00,000+2,00,000=15,00,000


    furnished in FORM =2,60,000 The additional amount of ITC
    GSTR-1 85 invoices availed shall be limited to
    involving ITC of Rs. ensure that the total ITC
    13 lakhs as on the availed does not exceed the
    due date of total eligible ITC.
    furnishing of the
    details of outward In this case as we have already
    supplies by the availed full credit in month
    suppliers it5self so there is no need to
    take any additional credit in
    further month

    2. Credit to be taken in In case 1 of Point 3


    Subsequent month
    Month Invoices uploaded by Eligible ITC Remarks
    suppliers involving for the month
    tax during the month (Rs.)
    (Rs.)
    Oct-19 10,00,000 12,00,000 Rs. 10,00,000/- x
    120% not exceeding
    Rs. 15 lakhs
    Nov-19 2,00,000 2,40,000 Rs. 2,00,000/- x 120%
    not exceeding Rs. 15
    lakhs
    Dec-19 1,00,000 60,000 Rs. 1,00,000/- x
    120%, however this
    month the eligible ITC
    is exceeding Rs. 15
    lakhs (as per
    calculation).
    Therefore, it should
    be restricted to Rs. 15
    lakhs.
    Jan-20 60,000 0 As entire amount of
    Feb - 20 1,40,000 0 Rs. 15 lakhs has been
    taken. No further ITC
    shall be availed.

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