Important_GST (availment of ITC ) update
Recent amendment under GST – Availment of the Input Tax Credit on purchase of Good & Services
As per the new sub-rule (4) inserted in rule 36 of the Central Goods and Service Tax Rules, 2017, a taxpayer filing GSTR-3B can claim provisional Input Tax Credit (ITC) only to the extent of 20% of the eligible credit available, in respect of invoices or debit notes, the details of which have been uploaded by the suppliers in the GSTR-2A.
After the implementation of this rule, the provisional ITC amount will be restricted only to the extent of 20% of the eligible ITC value already reflected in the GSTR-2A for that period. Apart from the 20% of eligible ITC which a taxpayer can claim as provisional credit, the balance tax liability will need to be paid in cash.
Let’s decode the new rule on provisional ITC limit with an example. If a taxpayer is filing his GSTR-3B for the month of November 2019, here is how he would claim input tax credit in his GSTR-3B before and after the implementation of the rule.
|1||Eligible ITC* available in the Purchase register||1,00,000||1,00,000|
|2||Eligible ITC* available in the GSTR-2A||60,000||60,000|
|3||ITC that can be claimed as provisional credit||40,000||12,000 (60,000*20%)|
|4=2+3||Total ITC that can be claimed in the GSTR-3B||1,00,000||72,000|
|5=1-4||ITC not allowed in the GSTR-3B of November 2019||Nil||28,000|
Impact on Tax Payer – From November 2019 onwards taxpayer has to go thorough / reconcile GSTR2A with books of account on monthly basis before filing of GSTR 3B. Because if difference of ITC claimed in GSTR -3B is more than 20% of ITC available in GSTR 2A, leads to WRONG AVAILMENT OF INPUT TAX CREDIT. GST Authority may ask to reverse the credit and / or charge interest on such excess availed amount.