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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,-
- an invoice issued by the supplier of goods or services or both in accordance with the provisions of section 31;
- 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
- a debit note issued by a supplier in accordance with the provisions of section 34;
- 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;
- 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
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Why Monthly Reconciliation in GST is Compulsory after 9th October 2019
| 1. | Credit to be taken in particular month
|
Credit Available in 2A – Blocked Credit – Invoice reflected in 2A but Goods or Service 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
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| 2. | Credit to be taken in Subsequent month
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In case 1 of Point 3
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