14 Jan, 2020. | Category: INDIRECT TAX
Restriction in availment of Input Tax Credit (ITC) Rule 36(4) of CGST Rules 2017:
At the time of the introduction of GST regulations, the law required recipient taxpayers to avail ITC only after matching details of outward supplies declared by suppliers in their GSTR-1 (known as 'Matching Principle'). However, due to technological limitations, these provisions were deferred by the Government. With the insertion of the above rule, the 'Matching Principle' has been revived albeit with some flexibility.
Primarily the reason for the Introduction of such limitations to Claim Input Tax Credit is to avoid Excess Claim of ITC, Erroneous Refunds and to Boost the Revenue Collection in the Economy.
For Example, in uncomplicated Terms, Now Taxpayers can Claim ITC as Under:
|
Eligible ITC as per taxpayers books [A] |
100 |
|
Eligible ITC in FORM GSTR-2A [B] |
70 |
|
Un-matched ITC [C = A-B] |
30 |
|
10% of Matched ITC [ D= 10% of B]* |
07 |
|
Total ITC to be Claimed {Lower of (D+B) or A } |
77 |
In Earlier Tax regime the Burden of getting returns filed by the assessee was of Department officials. Now in GST Era, it is slowly getting shifted to Dealers to follow up their suppliers and get their returns filed. So, that they can claim their ITC in Eligible Manner.
*At the time of Inception of this rule vide Notification 49/2019 CT dated 9th October 2019 the rate of Excess ITC that can be claimed was 20% and Later vide Notification 75/2019 CT dated 26th December 2019 w.e.f from 1st January 2020.
For further details, please refer the below links in the website of CBIC:
Source: http://cbic.gov.in/resources//htdocs-cbec/gst/circular-cgst-123_New.pdf