The Central Board of Indirect Taxes and Customs (CBIC) issued clarification on the restrictions for availment of Input Tax Credit (ITC) under Rule 36(4) of the CGST Rules, 2017.
The Board keeping in view of measures taken to contain the spread of the COVID-19 pandemic vide notification No. 30/2020-CT, dated April 3, 2020, it had been prescribed that the condition made under rule 36(4) of the CGST Rules shall apply cumulatively for the tax period February, March, April, May, June, July and August, 2020 and that the return in FORM GSTR-3B for the tax period September, 2020 shall be furnished with the cumulative adjustment of the input tax credit for the said months.
“It is reiterated that the clarifications issued earlier vide Circular No. 123/42/2019 – GST dated 11.11.2019 shall still remain applicable, except for the cumulative application as prescribed in the proviso to sub-rule (4) of rule 36 of the CGST Rules,” the Board notified.
The Board advised all the taxpayers to ascertain the details of invoices uploaded by their suppliers under section 37(1) of the CGST Act for the periods of February, March, April, May, June, July, and August, 2020, till the due date of furnishing of the statement in FORM GSTR-1 for the month of September, 2020 as reflected in GSTR-2As.
The circular said that the taxpayers shall reconcile the ITC availed in their FORM GSTR-3Bs for the period February 2020 to August, 2020 with the details of invoices uploaded by their suppliers of the said months, till the due date of furnishing FORM GSTR-1 for the month of September, 2020.
The Board pointed out that availability of 110% of the cumulative value of the eligible credit available in respect of invoices or debit notes the details of which have been uploaded by the suppliers under section 37(1) of the CGST Act does not mean that the total credit can exceed the tax amount as reflected in the total invoices for the supplies received by the taxpayer i.e. the maximum credit available in terms of provisions of section 16 of the CGST Act.
“The excess ITC availed arising out of reconciliation during this period, if any, shall be required to be reversed in Table 4(B)(2) of FORM GSTR-3B, for the month of September 2020. Failure to reverse such excess availed ITC on account of the cumulative application of sub-rule (4) of rule 36 of the CGST Rules would be treated as availment of ineligible ITC during the month of September, 2020,” the Board clarified.
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