No GST ITC if return are not filed by suppliers ?

Eligibility for ITC under GST law after amendment.

• What is new amendment under rule 36(4) in GST ITC eligiblity ?

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 i.e. GSTR1, 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 i.e. GSTR1

• What is the conditions to claim GST-ITC under section 16 of CGST act 2017 ?

1. Possession of a tax invoice or debit note or document evidencing payment
2. Receipt of goods and/or services
3. Goods delivered by supplier to other person on the direction of a registered person against a        document of transfer of title of goods
4. Furnishing of a return
5. Where goods are received in lots or installments ITC will be allowed to be availed when the last lot or installment is received
6. Failure of the supplier towards supply of goods and/or services within 180 days from the date of invoice, ITC already claimed by recipient will be added to output tax liability and interest to paid on such tax involved. On payment to supplier, ITC will be again allowed to be claimed

7. No ITC will be allowed if depreciation has been claimed on tax component of a capital good
8.Time limit to claim ITC against an Invoice or Debit Note is earlier of below dates:
The due date of filing GST Return for September of next Financial year,or
Date of filing the Annual Returns relevant for that Financial year

• Difference between previous ITC conditions and new conditions.

For claiming ITC we have to track GSTR-2A on regular basis and whether our suppliers uploading invoices on regular basis if invoices are not uploaded on portal then we are eligible upto 20% of total ITC only if having physical copy of Invoice.

Previously, entities could self-assess their ITC claims on the basis of the invoice copy, without any such restrictions provided the criteria outlined in Section 16 of the CGST Act were fulfilled i.e. one of condition of having physical copy of Invoices

Example:

         Taxable IGST Status          Invoice Status ITC Status

                  Value     @12%

Invoice 1   10000 1200 Uploaded    Copy Rec.        Available

Invoice 2   20000 2400 Uploaded    Copy Rec.        Available

Invoice 3   30000 3600 Uploaded    Copy Rec.        Available

Invoice 4   40000 4800 Not Uploaded   Copy Rec.       Available upto 20% 

Invoice 5   50000 6000 Not Uploaded   Copy Rec.     (Sum of Invoice 1 to 3)

Invoice 5   50000 6000 Not Uploaded      Not Rec.       Not available

ITC for Invoice 1,2 & 3 i.e Rs 7200 will be available but for Invoice 4 & 5, we can claim ITC upto 20% of Rs 7200 i.e Rs. 1440 balance ITC for Invoice 4 & 5 i.e Rs 9360 (Rs 10800-1440) claim when Invoice uploaded in subsequent month or upto 20% of Sum of GSTR 2A. 

• ITC which are outside the purview of Rule 36(4)

1. Rule 36(4) talks about credit available on the basis of invoices and hence it is not applicable to ITC available on the Bill of Entry against import of goods.

As a corollary to above 20% shall not be calculated on ITC available on the basis of Bill of Entry.

2. 20% Cap shall also not be applicable on ITC available on RCM (including import of services) because Rule 36(4) applies to invoices or debit notes uploaded/not uploaded by the supplier and not the Credit available on the basis of Self Invoice issued u/s 31(3)(f).

3. 20% Cap is also not applicable to Credit Invoice issued by Input service Distributor under Rule 54(1), because input service distributor is also not supplier

4. Hence Rule 36(4) is not applicable to ITC placed in Table 4A.1 to 4A.4 of GSTR 3B which encompasses ITC available on import of goods, import of services, inward supplies subject to RCM and Inward supplies from ISD. The only focus under Rule 36(4) is Table 4A.5 of GSTR 3B which talks about all other ITC.

5. Even amongst all other ITC at least two more ITC may be outside the scope of Rule 36(4)

i) ITC restored back after making payment of value of goods or services along with tax after 180 days under 3rd Proviso to S. 16(2) because again ITC is not taken on the basis of invoices

ii) Excess reversal of ITC restored back under Rule 42(2) after final calculation

6. Needless to say, that ITC travelling directly to Credit ledger like through ITC-01, ITC02, TRAN-1, TRAN-2 and TRAN-3 is also outside the purview of Rule 36(4).

Official Notification: 49/2019-Central Tax ,dt. 09-10-2019

 http://www.cbic.gov.in/resources//htdocs-cbec/gst/notfctn-49-central-tax-english-2019.pdf;jsessionid=0745989F89D329CCB80FB131E97EC9DD