Clarification regarding the restrictions imposed on the availment of Input Tax Credit (ITC) under Rule 36(4) of the CGST Rules, 2017 was made by the Central Board of Indirect Taxes and Customs (CBIC).
CBIC earlier has issued notification No. 30/2020-CT, dated April 3, 2020, while keeping in view the measures taken to contain the spread of the COVID-19 pandemic. It was prescribed that the condition made under rule 36(4) of the CGST Rules shall apply cumulatively for the tax period February, March, April, May, June, July and August 2020 and the FORM GSTR-3B for the tax period September 2020 shall get furnished with the cumulative adjustment of the input tax credit for the said months.
CBIC notified, “It is reiterated that the clarifications issued earlier vide Circular No. 123/42/2019 – GST dated 11.11.2019 shall still remain applicable, except for the cumulative application as prescribed in the proviso to sub-rule (4) of rule 36 of the CGST Rules.”
All the taxpayers were advised by the Board to ascertain the details of invoices uploaded by their suppliers under section 37(1) of the CGST Act for the periods of February, March, April, May, June, July, and August 2020, till the due date of furnishing of the statement in FORM GSTR-1 for the month of September 2020 as reflected in GSTR-2As.
The circular also informed to the taxpayers that they should reconcile the ITC availed in their FORM GSTR-3Bs for the period February 2020 to August 2020 with the details of invoices uploaded by their suppliers of the said months, till the due date of furnishing FORM GSTR-1 for the month of September 2020.
It was pointed out about the availability of 110% of the cumulative value of the eligible credit available in respect of invoices or debit notes the details of which have been uploaded by the suppliers under section 37(1) of the CGST Act does not mean that the total credit can exceed the tax amount as reflected in the total invoices for the supplies received by the taxpayer i.e. the maximum credit available in terms of provisions of section 16 of the CGST Act by CBIC.
CBIC also clarified, “The excess ITC availed arising out of reconciliation during this period, if any, shall be required to be reversed in Table 4(B)(2) of FORM GSTR-3B, for the month of September 2020. Failure to reverse such excess availed ITC on account of the cumulative application of sub-rule (4) of rule 36 of the CGST Rules would be treated as availment of ineligible ITC during the month of September 2020.”
With Warm Regards,