Rule 36 of CGST Rules, 2017 was amended vide Notification No. 49/2019-Central Tax dated 09.10.2019 to insert sub-rule (4) as reproduced below:
“(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 per cent of the eligible credit available in respect of invoices or debit notes the details of which have been uploaded by the suppliers under sub-section (1) of section 37.”
The above notification was brought into effect from 09.10.2019. As per this notification the taxpayer is allowed to claim input tax credit excess to the extent of 20% of the eligible amount in GSTR-2A if the invoice for which input tax credit is claimed is not appearing in GSTR-2A report.
This notification made the taxpayer to follow up with their supplier to ensure that they upload their outward supply invoices in their GSTR-1. If the amount of input tax credit is small it does not impacts much. However, if the credit amount is substantial then it hits the cash flow of the taxpayer much.
First amendment to rule 36(4):
The rule 36(4) was amended vide notification no. 75/2019-Central Tax dated 26.12.2019 to substitute the percentage from 20% to 10%. The rule after amendment read as below:
“(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 10 per cent of the eligible credit available in respect of invoices or debit notes the details of which have been uploaded by the suppliers under sub-section (1) of section 37.”
The above notification was brought into effect from 01.01.2020.As per this notification the taxpayer is allowed to claim input tax credit excess to the extent of 10% of the eligible amount in GSTR-2A if the invoice for which input tax credit is claimed is not appearing in GSTR-2A report.
Second amendment to rule 36(4):
The rule 36(4) is amended vide notification no. 94/2020-Central Tax dated 22.12.2020 to substitute the percentage from 10% to 5%. The rule after amendment read as below:
“(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 5 per cent of the eligible credit available in respect of invoices or debit notes the details of which have been uploaded by the suppliers under sub-section (1) of section 37.”
The above notification is brought into effect from 01.01.2021. As per this notification the taxpayer is allowed to claim input tax credit excess to the extent of 5% of the eligible amount in GSTR-2A if the invoice for which input tax credit is claimed is not appearing in GSTR-2A report.
Author’s view:
Rule 36(4) provides a restriction to claim input tax credit in the manner that the invoice of which input tax credit is claimed must appear in GSTR-2A. That is, the supplier must upload his outward supply invoice in his GSTR-1 appropriately. Appropriately means that he must furnish correct GSTIN and correct tax amount in the return. Otherwise the input tax credit is allowed only to the extent of 5% more to the eligible credit that is appearing in GSTR-2A.
Further, the taxpayer has to consider the condition of section 16 and section 17 before applying rule 36(4) condition. A proper working of such input tax credit is essential to substantiate the claim of input tax credit.
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