Amendment restricting GST ITC and other changes in GST Laws

Rohit Kumar Singh 
on 14 October 2019


The Central Board of Indirect Taxes and Customs (CBIC) has issued notifications under GST Laws to implement the recommendation of the 37th GST Council held on 20th September, 2019. More important being amendment to CGST Rules, 2019 which seeks to amend conditions to avail ITC.

The summary of notifications have been given below for easy understanding:

 
  

1. Announcement of due dates for GST Returns (GSTR 1 and GSTR 3B)

S. No

Notf. No

Return in Form

Period

Due Date

1.

44/2019-Central Tax

GSTR 3B

October 2019 to March 2020

20th day of the month succeeding such month

2.

46/2019-Central Tax

GSTR 1 (Monthly)

October 2019 to March 2020

11th day of the month succeeding such month

3.

45/2019-Central Tax

GSTR 1 (Quarterly)

October to December 2019

31st January, 2020

January to March 2020

30th April 2020

2. Annual Return Optional for small taxpayers -

Filing of Annual Return in GSTR 9 has been made optional for registered persons (aggregate turnover not exceeding two crore rupees and who have not furnished the annual return) in respect of financial years 2017-18 and 2018-19. (47/2019-Central Tax)

 

3. Key Changes to GST Rules (47/2019-Central Tax)

Changes in the manner of availment of ITC - Insertion of new sub-rule 36(4)

'Input tax credit to be availed by a registered person in respect of invoices or debit notes, the details of which have not been uploaded by the suppliers under sub-section (1) of section 37, shall not exceed 20 percent. of the eligible credit available in respect of invoices or debit notes the details of which have been uploaded by the suppliers under subsection (1) of section 37”

Interpretation

We can take a scenario to explain the amendment -

• an assessee has a total input credit of Rs 5,00,000 of which GSTR 2A reflects Rs 3,00,000

• but the remaining Rs 2,00,000 is not reflected in GSTR-2A/un-reconciled

The taxpayer can only avail Rs 3,60,000 (Rs 3,00,000 - Invoices reflected in GSTR 2A and 20% of ITC which is reflected in GSTR 2A)

Example to Illustrate the change -

  

Particulars

ITC available Prior to Amendment

ITC available Post Amendment

Total ITC for any tax period

Rs 5,00,000

Rs 5,00,000

ITC appearing in GSTR 2A

Rs 3,00,000

Rs 3,00,000

Ineligible ITC

Rs 25,000

Rs 25,000

Eligible ITC for the period

Rs 4,75,000

Rs 4,75,000

ITC which may be availed

Rs 4,75,000

Rs 2,75,000 + 20% of 3,00,000

Rs Rs 3,35,000

The proposed change may impact the cash flow of the entities and they may have to shell out cash for the blocked ITC.

 

How businesses may ensure ITC availment in amended provisions -

  1. Reconcile GSTR 2A with invoices available in Books before filing GSTR 3B.
  2. Follow up with suppliers whose invoices are not appearing in GSTR 2A and request them to report the same.
  3. Ideally, the businesses may ask the suppliers to report the invoices prior to filing GSTR 1 to avoid any ITC being missed out.

Disclaimer: The content of this document is for general information purpose only. TaxMarvel shall not accept any liability for any decision taken based on the advice. You should carefully study the situation before taking any decision.


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