Circular No. 123/42/2019-GST [C10-4BF]

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).

2. 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.

3. 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. Issue Clarification No

1. What are the invoices The restriction of availment of ITC is imposed only in respect

Circular No. 123/42/2019– GST

/ debit notes on which of those invoices / debit notes, details of which are required to the restriction under be uploaded by the suppliers under sub-section (1) of section 37 rule 36(4) of the CGST and which have not been uploaded. Therefore, taxpayers may Rules shall apply? 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 The restriction imposed is not supplier wise. The credit available restriction is to be under sub-rule (4) of rule 36 is linked to total eligible credit from calculated supplier all suppliers against all supplies whose details have been wise or on uploaded by the suppliers. Further, the calculation would be consolidated basis? 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 The amount of input tax credit in respect of the invoices / debit being a dynamic notes whose details have not been uploaded by the suppliers document, what shall not exceed 20% of the eligible input tax credit available to would be the amount the recipient in respect of invoices or debit notes the details of of input tax credit that which have been uploaded by the suppliers under sub- section is admissible to the (1) of section 37 as on the due date of filing of the returns in taxpayers for a FORM GSTR-1 of the suppliers for the said tax period. The particular tax period in taxpayer may have to ascertain the same from his auto populated respect of invoices FORM GSTR 2A as available on the due date of filing of / debit notes whose FORM GSTR-1 under sub-section (1) of section 37. details have not been uploaded by the suppliers?

4. How much ITC a Sub-rule (4) of rule 36 prescribes that the ITC to be availed by a registered tax payer registered person in respect of invoices or debit notes, the details can avail in his FORM of which have not been uploaded by the suppliers under sub- GSTR-3B in section (1) of section 37, shall not exceed 20 per cent. of the a month in case the eligible credit available in respect of invoices or debit notes the details of some of the details of which have been uploaded by the suppliers under sub- invoices have not been section (1) of section 37. The eligible ITC that can be availed is uploaded by the explained by way of illustrations, in a tabulated form, below. suppliers under sub- section (1) of section In the illustrations, say a taxpayer “R” receives 100 invoices (for

37. inward supply of goods or services) involving ITC of Rs.

Circular No. 123/42/2019– GST

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 20th Nov, 2019.

Details of 20% of Eligible ITC to be suppliers’ eligible credit taken in GSTR- invoices for where 3B to be filed by which invoices are 20th Nov. recipient is uploaded eligible to take ITC Case Suppliers have Rs.1,20,000/- Rs. 6,00,000 (i.e.

1 furnished in amount of eligible FORM ITC available, as GSTR-1 80 per details invoices uploaded by the involving ITC suppliers) + of Rs. 6 lakhs Rs.1,20,000 (i.e. as on the due 20% of amount of date of eligible ITC furnishing of available, as per the details of details uploaded outward by the suppliers) = supplies by the Rs. 7,20,000/- suppliers. Case Suppliers have Rs. 1,40,000/- Rs 7,00,000 + Rs.

2 furnished in 1,40,000 = Rs. FORM 8,40,000/- 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. Case Suppliers have Rs. 1,70,000/- Rs. 8,50,000/- +

3 furnished in Rs.1,50,000/-* = FORM Rs. 10,00,000 GSTR-1 75 invoices * The additional

Circular No. 123/42/2019– GST

having ITC of amount of ITC Rs. 8.5 lakhs availed shall be as on the due limited to ensure date of that the total ITC furnishing of availed does not the details of exceed the total outward eligible ITC. supplies by the suppliers.

5. When can balance ITC The balance ITC may be claimed by the taxpayer in any of the be claimed in case succeeding months provided details of requisite invoices are availment of ITC is uploaded by the suppliers. He can claim proportionate ITC as restricted as per the and when details of some invoices are uploaded by the suppliers provisions of rule provided that credit on invoices, the details of which are not 36(4)? uploaded (under sub-section (1) of section 37) remains under 20 per cent of the eligible input tax credit, the details of which are uploaded by the suppliers. Full ITC of balance amount may be availed, in present illustration by “R”, in case total ITC pertaining to invoices the details of which have been uploaded reaches Rs. 8.3 lakhs (Rs 10 lakhs /1.20). In other words, taxpayer may avail full ITC in respect of a tax period, as and when the invoices are uploaded by the suppliers to the extent Eligible ITC/ 1.2. The same is explained for Case No. 1 and 2 of the illustrations provided at Sl. No. 4 above as under:

Case “R” may avail balance ITC of Rs. 2.8 lakhs in case

1 suppliers upload details of some of the invoices for the tax period involving ITC of Rs. 2.3 lakhs out of invoices involving ITC of Rs. 4 lakhs details of which had not been uploaded by the suppliers. [Rs. 6 lakhs + Rs. 2.3 lakhs = Rs. 8.3 lakhs] Case “R” may avail balance ITC of Rs. 1.6 lakhs in case

2 suppliers upload details of some of the invoices involving ITC of Rs. 1.3 lakhs out of outstanding invoices involving Rs. 3 lakhs. [Rs. 7 lakhs + Rs. 1.3 lakhs = Rs. 8.3 lakhs]

4. It is requested that suitable trade notices may be issued to publicize the contents of this Circular. Hindi version will follow.