Blocking of GST Credit and Restriction of ITC to 10% of GSTR 2A

Last updated: 15 March 2021

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The GST Council in its 38th Meeting held on 18th December, 2019 at New Delhi decided to take certain measures to curb the issue of ITC being availed on fake invoices as well as fall in monthly GST revenue collection.

Blocking of GST Credit and Restriction of ITC to 10 of GSTR 2A

Input tax credit to the recipient in respect of invoices or debit notes that are not reflected in his FORM GSTR-2A shall be restricted to 10 % of the eligible credit available in respect of invoices or debit notes reflected in his FORM GSTR-2A. (Earlier the said restriction was 20% of eligible Invoices).

To implement these important changes, CGST (Ninth Amendment) Rules, 2019 has been notified by the Central Board of Indirect Taxes (CBIC) by issuing Notification No 75/2019-Central Tax dated 26th December, 2019.

The key highlights of the 9th Amendment to GST Rules, 2017 has been enumerated below -

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Sr. No	CGST Rule	Amended Provision	Effective From
1	36(4)	Input tax credit to the recipient in respect of invoices or debit notes that are not reflected in his FORM GSTR-2A shall be restricted to 10 % of the eligible credit available in respect of invoices or debit notes reflected in his FORM GSTR-2A. (Earlier the said restriction was 20% of eligible Invoices).	1st January 2020
2	Rule 86A	Conditions for use of amount available in Electronic Credit Ledger ITC has been availed by recipient (Invoice/Debit Note) - The issuer does not exist or does not carry business from any place for which registration has been obtained; or Goods or Services is not received The Supplier does not pay tax to the Government; or The recipient does not exist or does not carry business from any place for which registration has been obtained; or The Invoice or Debit note, on which ITC is availed, is not in possession of the Registered Person In the above cases, the Department may not allow the disputed ITC to be used for payment of GST Liability or allow refund of such ITC. Such Restriction shall apply till one year from the date of imposing such restriction	26th December 2019
3	Rule 138E	The generation of E-Way Bill on the portal shall be blocked in case of non-Filing of GSTR 1 for 2 months or quarters (this block shall apply to a person as a recipient/ Supplier/Transported). Earlier the blockage was in case of non-filing of GSTR 3B for 2 months or quarters.	11th January 2020

2. Waiver of Late Fees for filing GSTR 1 from July 2017 to November 2019 -

Central Board of Indirect Taxes (CBIC) by issuing Notification No 74/2019-Central Tax dated 26th December, 2019 has waived late fees for furnishing GSTR 1 for the Period July 2017 to November 2019 till 10th January, 2020.

The effect of the waiver shall be from 19th December 2019 to 10th January 2020.

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About the Author

Rohit Kumar Singh

Founder - TaxMarvel Consulting Services LLP

Rohit is a CA, CS and CMA and Gold Medalist Law Graduate. He has also passed DISA (ICAI). Rohit is Founder of TaxMarvel Consulting Services LLP (a niche consulting firm engaged in providing GST Services to Corporates and SMEs) He was earlier head ofGST Business (GST Suvidha Provider) for Karvy Data Management Servic ... Read more

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