12/11/2019
CLARIFICATION ON ITC RESTRICTION RULE 36(4)
Certain clarification are issued by CBIC on 11th November 2019 regarding restriction on ITC availment :
1) What are invoices/debit notes on which restriction shall apply ?
Ans : Restriction only on those invoices which are not uploaded.
Full ITC available on those invoices which are uploaded, IGST paid on imports, documents issued under RCM, credit received from ISD etc. provided eligibility conditions for availment of ITC are met.
2) Whether restriction calculated on supplier wise or consolidated basis?
Ans: Restriction is not supplier wise. 20% of the ITC will be allowed on the total value of the invoices which are reflected in GSTR-2A. Blocked credit i.e. credit specified under section 17(5) of the GST Act will not be considered for the purpose of calculation of 20%.
3) What would be the credit available to taxpayer in case invoice/debit notes whose details are not uploaded ?
Ans : 20% of the value of the credit of the invoices reflected in GSTR-2A.
Eg 1 : Total credit during October 2019 is Rs. 1,00,000 and in GSTR-2A the same is being shown as Rs. 30,000 then the credit available will be Rs. 36,000 (Rs. 30,000 being reflected in GSTR-2A and 20% of Rs. 30,000 invoice uploaded)
Eg 2 Total credit during October 2019 is Rs. 1,00,000 and in GSTR-2A the same is being shown as Rs. 8,50,000 then the credit available will be Rs. 10,00,000. ITC availed shall be limited to ensure that the total ITC availed does not exceed eligible ITC.
4) When can balance ITC be availed ?
Ans: The balance ITC can be availed in any succeeding months provided that the invoices are uploaded by the supplier. Tax payer may avail full ITC as and when the invoices are uploaded to the extent of Eligible ITC/1.20.
Imagine What kind of Mess this is going to create for the tax payer, Accountant and GST auditors ?
1) Tax payer will have to shell out more cash payment in initial phase till invoices are uploaded by the suppliers.
2) Accountants will have to pass new J.V. every month for transferring the entries to restricted credit account. Also in subsequent periods they will have to reconcile GSTR-2A for deciding the amount of credit to be transferred back from restricted credit to eligible credit.
3) Auditors will have to give true and correct picture of the GST and hence they will have to check each and every transaction pertaing to restricted entry also. Hence they also will have to conduct audit on quarterly or half yearly basis as supposed to yearly basis as GSTR-2A get updated every few months.
CA. Bhavik D. Mehta
Mobile No. : 9825600105
