Restriction in the availment of the Input Tax Credit (“ITC”) in terms of Rule 36(4) of the CGST Rule

• The computation of the availment of the restriction in the amount of ITC has to be done by the taxpayer himself and will not be imposed through the GST portal on its own and therefore, the availment of restricted credit in terms of the said Rule shall be done on the self-assessment basis by the tax payers
   
• This restriction will be applicable only on the invoices/debit notes on which credit is availed after 9th October, 2019.
   
• The amount of ITC in respect of the invoices/debit notes whose details have not been uploaded by the suppliers shall not exceed 20% of the eligible input tax credit available to the recipient in respect of invoices or debit notes the details of which have been uploaded by the suppliers as on the due date of filing of the returns in FORM GSTR-1 of the suppliers for the said tax period. The recipient of the supply has to ascertain the same from his auto populated FORM GSTR 2A as available on the due date of filing of FORM GSTR-1.
   
• Taxpayer is allowed to avail full eligible ITC normally with respect to the details which are outside the ambit of Section 37(1). For instance:- IGST paid on imports, tax paid under reverse charge mechanism (“RCM”), credit received from input service distributor (“ISD”) etc. provided that the eligibility conditions for availment of ITC are met with respect to the same.
   
• The restriction imposed is to be calculated on a consolidated basis and not supplier wise. The credit available under the said Rule is linked to the total eligible credit from all suppliers against all supplies whose details have been uploaded by the suppliers.
   
• The invoices on which ITC is not otherwise available under any of the provision of the CGST Act would not be considered for calculating 20 % of the eligible credit available. For example, Blocked credits mentioned in section 17(5) are not to be included in eligible ITC.
   
• In case the details of some of the invoices have not been uploaded by the suppliers in their GSTR 1 and accordingly, not auto-populated in GSTR 2A of the recipient, then, the eligible ITC that can be availed. Please click here to view the same.
   
• The balance ITC may be claimed by the recipient in GSTR 3B of any of the succeeding months as and when the details of the requisite invoices are uploaded by the suppliers in their GSTR 1 and eventually auto-populated in GSTR 2A of the recipient. In the above illustration, full ITC of the balance amount may be availed by the taxpayer, in case the total ITC pertaining to invoices the details of which have been uploaded reaches INR 8.30 Lakhs (INR 10 Lakhs /1.20). The same is explained for Situation No. 1 and 2 of the illustration provided above, as follows:-
  
  Situation No.1: The taxpayer may avail the balance ITC of INR 2.80 Lakhs in case suppliers upload details of some of the invoices for the tax period involving ITC of INR 2.30 Lakhs out of invoices involving ITC of INR 4 Lakhs details of which had not been uploaded by the suppliers.
  
  Situation No.2: The taxpayer may avail the balance ITC of INR 1.60 Lakhs in case suppliers upload details of some of the invoices involving ITC of INR 1.30 Lakhs out of outstanding invoices involving INR 3 Lakhs.