What was the Issue:
Due to Change in ITC claiming Rules, There are differences arise in GSTR-3B vs GSTR 2A for 1.4.2019 to 31.12.2021 so it requires clarification
Let's know the Rule 36(4) and its continuous changes:
W.e.f. 09.10.2019, the said rule allowed availment of Input tax credit by a registered person in respect of invoices or debit notes, the details of which have not been furnished by the suppliers under sub-section (1) of section 37, in FORM GSTR-1/IFF to the extent not exceeding 20%. of the eligible credit available in respect of invoices or debit notes the details of which have been furnished by the suppliers under sub-section (1) of section 37 of CGST Act in FORM GSTR-1 or using the IFF.
The said limit was brought down to 10% w.e.f. 01.01.2020 and
further reduced to 5% w.e.f. 01.01.2021.
Abolish Rule 36(4) and New clause (aa) of Section 16(2)
Further, w.e.f. 01.01.2022, consequent to insertion of clause (aa) to sub-section (2) of section 16 of the CGST Act, ITC can be availed only up to the extent communicated in FORM GSTR-2B
This leading to discrepancies between the amount of ITC availed by the registered persons in their returns in FORM GSTR-3B and the amount as available in their FORM GSTR-2A/2B
One More Section require your attention here is Section 16(2)(c): which provides that ITC cannot be availed unless tax on the said supply has been paid by the supplier.
In this context, it is mentioned that rule 36(4) of CGST Rules was a facilitative measure and availment of ITC in accordance with rule 36(4) was subject to fulfilment of conditions of section 16 of CGST Act including those of clause (c) of sub-section (2) thereof regarding payment of tax by the supplier on the said supply
Download Circular from Here: https://taxupdates.cagurujiclasses.com/8-new-gst-circular-dated-17-july-2023/
Clarification:
1) For Period from 1.4.2019 to 8.10.2019
Since rule 36(4) came into effect from 09.10.2019 only, the guidelines provided by
Circular No. 183/15/2022-GST dated 27th December, 2022 (https://taxinformation.cbic.gov.in/view-pdf/1003135/ENG/Circulars) shall be applicable, in toto, for the period from 01.04.2019 to 08.10.2019.
2) For Period from 9.10.2019 to 31.12.2019
Rule 36(4) of CGST Rules permitted availment of Input tax credit by a registered person in respect of invoices or debit notes, the details of which have not been furnished by the suppliers under sub-section (1) of section 37, in FORM GSTR-1 or using IFF to the extent not exceeding 20 per cent. of the eligible credit available in respect of invoices or debit notes, the details of which have been
furnished by the suppliers under sub-section (1) of section 37 in FORM GSTR-1 or using IFF.
Accordingly, the guidelines provided by Circular No. 183/15/2022-GST dated 27th December,
2022 shall be applicable for verification of the condition of clause (c) of sub-section (2) of
Section 16 of CGST Act for the said period, subject to the condition that availment of Input tax
credit by the registered person in respect of invoices or debit notes, the details of which have
not been furnished by the suppliers under sub-section (1) of section 37, in FORM GSTR-1 or
using IFF shall not exceed 20 per cent. of the eligible credit available in respect of invoices or
debit notes the details of which have been furnished by the suppliers under sub-section (1) of
section 37 in FORM GSTR-1 or using IFF
Example:
ITC available as per FORM GSTR-2A of Rs. 3,00,000, whereas, the amount of ITC availed in FORM GSTR-3B was Rs.500000
As per Rule 36(4) : ITC can be availed Rs 3,00,000*1.2 = Rs.3,60,000.
In the above case, the ITC of Rs 1,40,000 which has been availed in excess of Rs. 3,60,000 shall not be admissible
Therefore, ITC availed in FORM GSTR-3B in excess of that available in FORM GSTR-2A up to an amount of Rs 60,000 only (i.e. 3,60,000-3,00,000) can be allowed subject to production of the requisite certificates as per Circular No. 183/15/2022-GST dated 27.12.2022.
3) For Period from 1.1.2020 to 31.12.2020
Similar to case 2 in this period ITC above 10% was allowed only.
For Period from 1.1.2021 to 31.12.2021
Similar to case 2 in this period ITC above 5% was allowed only.
From 1.1.2022
From this period ITC is allowed only if it is communicated in GSTR-2B
Cumulative ITC for the period Feb to August 2020
Further, it may be noted that proviso to rule 36(4) of CGST Rules was inserted vide Notification No. 30/2020-CT dated 03.04.2020 to provide that the condition of rule 36(4) shall be applicable cumulatively for the period February to August, 2020 and ITC shall be adjusted on cumulative basis for the said months in the return for the tax period of September 2020.
The same may be taken into consideration while determining the amount of ITC eligibility for the said tax periods.
Cumulative ITC for the period April to June 2021
Similarly, second proviso to rule 36(4) of CGST Rules was substituted vide Notification No.
27/2021-CT dated 01.06.2021 to provide that the condition of rule 36(4) shall be applicable
cumulatively for the period April to June, 2021 and ITC shall be adjusted on cumulative basis
for the said months in the return for the tax period of June 2021.
The same may be taken into consideration while determining the amount of ITC eligibility for the said tax periods.
It may also be noted that these guidelines are clarificatory in nature and may be applied as per the actual facts and circumstances of each case and shall not be used in the interpretation of the provisions of law.
These instructions will apply only to the ongoing proceedings in scrutiny/ audit/ investigation, etc. for the period 01.04.2019 to 31.12.2021 and not to the completed proceedings. However, these instructions will apply in those cases during the period 01.04.2019 to 31.12.2021 where any adjudication or appeal proceedings are still pending
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