• By ADMIN
• Posted 09 Nov, 2019
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Input Tax Credit restriction on unreported invoices

In order to force taxpayers to file GSTR-1, well before due date in each month/period, a restriction on claiming input tax credit on the side of goods & service receivers is introduced. 20% of Input Credit reflected in GSTR-2A (online) is the maximum can be claimed as ITC for cases where bills had been received by the Goods & Services receiver but relevant ITC not reflected in GSTR-2A for the month.

The following are the example to understand the concept:

ITC Invoice received for September, 2019 Rs.200/-

ITC reflected in GSTR-2A on the date of filing GSTR-3B for September, 2019 Rs.100/-

ITC can be availed / allowed only Rs.100 (What is reflected in GSTR-2A) plus 20% of what is reflected in GSTR-2A that is Rs.100 *20%=Rs.20. The total ITC can be claimed for the Month of September, 2019 would be Rs.120.

The CAP of 20% of ITC reflected in GSTR-2A is fixed under Rule 36(4). This leads to few practical difficulties as described below

1. There are case where quarterly GSTR-1 filings allowed, hence though they raise invoice on daily basis, they will file quarterly and in respect of those invoices monthly credit cannot be expected in GSTR-2A. There is no clarity in this aspect.

2. Reconciling unclaimed portions based this restriction of 20% on monthly basis leads to more responsibility for the accountants and consultants.

3. It looks like GSTR-1 for every month to be filed well before filing GSTR-3B so as to reconciliation can be done between GSTR-2A and Proposed GSTR-3B for the month and the restriction of 20% can be applied accordingly.

4. Legality of the rule might be questioned in court of law.