COVID-2019 IMPACT: STATUS OF “10% ITC RULE FOR AVAILMENT OF ITC”
Further to our blog https://taxbaniya.com/changes-in-input-tax-credit-rule-364-in-gst/
Relief due to COVID-19 spread:
Notification No. 30/2020 – Central Tax, 3rdApril, 2020
In the said rules, in sub-rule (4) of rule 36, the following proviso shall be inserted, namely:-
“Provided that the said condition shall apply cumulatively for the period February, March, April, May, June, July and August, 2020 and the return in FORM GSTR-3B for the tax period September, 2020 shall be furnished with the cumulative adjustment of input tax credit for the said months in accordance with the condition above.”
It is provided that the said limit of 10% shall apply cumulatively for the tax periods Feb-20 to Aug-20 and the return in GSTR-3B for Sep-20 shall be furnished with the cumulative adjustment of ITC for the said months in accordance with the above condition of 10%.
Therefore, vendor compliance will again play a very important role for maximizing the ITC. Rule 36 (4) is not suspended but its effect of Feb 2020 to Aug 2020 has been deferred till September, 2020.
CONCLUSION:
- Whether 10% rule is suspended? – No its postponed for monthly basis rather need to comply on Cumulative basis in Sep 20 Return for February 2020 to August, 2020
- May I file GSTR 3B without applying rule 36(4)? – Yes, you may.
- Whether this deferment will cause the interest deferment on the excess ITC taken for the period Feb 2020- Aug 2020? – If the cumulative effect of the period of Feb 2020- Aug 2020 is taken care of as per the Notification No. 36/2020 – Central Tax, 3rdApril, 2020 in the months of Sep 2020 then there is not a consequence of interest to be into the picture
