Circular No. 142/12/2020-GST dated 09.10.2020 is been published by CBIC to clarify the application of rule 36(4) of CGST Rules for the period from February, 2020 to August, 2020.
With effect from 09.10.2019, vide Notification 49/2019-Central Tax dated 09.10.2019, the taxpayer were allowed to claim input tax credit only of those invoices which are populated in his GSTR-2A report. In case the invoices are not uploaded by their suppliers then the taxpayer can claim additional 20% of the credit that is populated in GSTR-2A.
A Circular No. 123/42/2019-GST dated 11.11.2019 was issued to clarify various doubts of the taxpayers with respect to the application of the condition prescribed in the aforementioned Notification No.49.
Thereafter from 01.01.2020, vide Notification No. 75/2019-Central Tax dated 26.12.2019, the percentage of provisional claim of input tax credit in cases the invoices are not found in GSTR-2A was reduced from 20% to 10%.
Thereafter on 03.04.2020 a Notification No. 30/2020-Central Tax dated 03.04.2020 was published to relax the condition of Rule 36(4) of CGST Rules, 2017 for the period from February, 2020 to August, 2020. However, a condition has been prescribed whereby the condition of rule 36(4) shall apply cumulatively for the aforesaid period and any adjustment in respect of the input tax credit claimed provisionally shall have to be adjusted in the return in Form GSTR-3B to be filed for the month of September, 2020.
Yesterday, CBIC has issued a Circular No. 142/12/2020-GST dated 09.10.2020 to clarify the implementation of rule 36(4) for period February, 2020 to August, 2020. It is clarified that the clarifications issued earlier vide Circular No.123/42/2019-GST dated 11.11.2019 shall still remain applicable except for these period.
It is clarified that the taxpayers shall reconcile the input tax credit availed provisionally in their GSTR-3B for the period February, 2020 to August, 2020 with the details of invoices uploaded by their suppliers for the said months, till the due date of furnishing Form GSTR-1 for the month of September, 2020. The cumulative amount of ITC availed for the said months in GSTR-3B should not exceed 110% of the cumulative value of the eligible credit available in respect of invoices or debit notes the details of which have been uploaded by the suppliers till the due date of furnishing of GSTR-1 for the month of September, 2020.
The excess input tax credit availed which may be ascertained after reconciliation shall be reversed by furnished in Table 4(B)(2) of GSTR-3B to be filed for the month of September, 2020.
The manner of cumulative reconciliation for the said months in terms of proviso to sub rule (4) of rule 36 of the CGST Rules is explained by way of illustration in a tabulated form, below.
Author’s views: Taxpayers have got only 10 days to complete the reconciliation of input tax credit for period February, 2020 to August, 2020 as well as for September, 2020 and to furnish the adjusted details in September month’s GSTR-3B to be filed on or before 20.10.2020. Taxpayers have only two days to report to their suppliers about the missing invoices in GSTR-2A and ensure that the suppliers have uploaded those reported invoices in his GSTR-1 to be filed on or before 11.10.2020.
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