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Taxpayers calculate and restrict the availment of input tax credit on a self-assessment basis when suppliers do not upload invoice details under section 37(1). The restricted input tax credit on unuploaded invoices must not exceed 20 percent of the eligible input tax credit available from uploaded invoices as of the supplier return due date. Taxpayers determine this amount from FORM GSTR-2A. Taxpayers claim the balance input tax credit in succeeding months after suppliers upload the required invoice details. The restriction applies only to invoices or debit notes where credit is availed after 09.10.2019, and does not apply to integrated goods and services tax paid on imports, reverse charge mechanism documents, or input service distributor credits.
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Circular No. 123/42/2019– GST
F. No. CBEC – 20/06/14/2019 – GST
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes and Customs
GST Policy Wing
New Delhi, the 11^th November, 2019
To
The Pr. Chief Commissioners / Chief Commissioners / Principal Commissioners /
Commissioners of Central Tax (All),
The Principal Director Generals / Director Generals (All)
Madam / Sir,
Subject: Restriction in availment of input tax credit in terms of sub-rule (4) of rule 36 of
CGST Rules, 2017 – reg.
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 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).
To ensure uniformity in the implementation of the provisions of the law across the field
formations, the Board, in exercise of its powers conferred under section 168(1) of the CGST
Act hereby clarifies various issues in succeeding paragraphs.
The conditions and eligibility for the ITC that may be availed by the recipient shall
continue to be governed as per the provisions of Chapter V of the CGST Act and the rules made
thereunder. This being a new provision, the restriction is not imposed through the common
portal and it is the responsibility of the taxpayer that credit is availed in terms of the said rule
and therefore, the availment of restricted credit in terms of sub-rule (4) of rule 36 of CGST
Rules shall be done on self-assessment basis by the tax payers. Various issues relating to
implementation of the said sub-rule have been examined and the clarification on each of these
points is as under: -
| Sl. No | Issue | Clarification |
|---|---|---|
| 1. | What are the invoices / debit notes on which the restriction under rule 36(4) of the CGST Rules shall apply? | The 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 under sub-section (1) of section 37 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 sub-section (1) of section 37, provided that eligibility conditions for availment 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 supplier wise or on 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 section 17) would not be considered for calculating 20 per cent. of the eligible credit available. |
| 3. | FORM GSTR-2A being 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 suppliers 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 sub- section (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 FORM 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 tax payer can avail in his FORM GSTR-3B in a month in case the details of some of the invoices have not been uploaded by the suppliers under sub-section (1) of section 37. | 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 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. 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 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 20^th Nov, 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 20^th 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/- | 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/- | Rs 7,00,000 + Rs. 1,40,000 = Rs. 8,40,000/- |
| **Case 3** | Suppliers have furnished in **FORM GSTR-1** 75 invoices 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
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