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.

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.