CBIC issue clarification for CGST ITC Rule for February, to August 2020


In order to poke the taxpayers to file their statement of outgoing supplies (GSTR-1), limits on availing of input tax credit (ITC) by the beneficiary was obligatory by inserting Rule 36(4) of the CGST Rules, 2017. Lately considering Covid-19 Outbreak assistance was accorded whereby it was agreed that said sub-rule will not be relevant while filing of returns under GST (GSTR-3B) for the time period of February to August 2020 and will be valid on a collective basis for these mentioned months, while filing of return for the month of September. Before going further first let us understand the restriction under Statutory provision (Rule 36(4)) under CGST.

What is Rule 36(4) under CGST Rules, 2017

The rule in CGST Rules, 2017, is mentioned below:-

”The ITC to be availed by any individual who is indexed in accordance of debit notes or bills, the particulars by the traders have not been uploaded under 37 (1), shall not go beyond 20 percent of the entitled credit obtainable in respect of debit notes or bills, particulars by the suppliers have not been uploaded under 37 (1).”

Highlights of the Clarification under CGST Rules

  • The clarifications issued earlier vide Circular No. 123 /42 /2019 – General Sales Tax must still remain legitimate, apart from for the application which is cumulated as determined in the proviso to Section 36(4) of the CGST Rules. Accordingly, all the taxpayers are recommended to establish the details of bills uploaded by their contractor in GSTR-1 for the year 2020 in the period of February to August, 2020, until the due date of providing of the statement by the month of September 2020 as replicated in GSTR-2As.
  • Taxpayers shall settle the Input Tax Credit availed in their FORM GSTR-3B for the period starting from February, 2020 end ending at August, 2020 with the details of bills which by their providers get uploaded in the mentioned months, till the due date of supplying FORM GSTR-1 for the month of September, 2020. The total amount of Input tax credit availed for the said months in FORM GSTR-3B should not surpass 110% of the cumulative value of the eligible credit accessible in respect of debit notes or bills the information of which has been uploaded by the dealer under Section 37(1) of the CGST Act[1]. This would be applicable till the due date of securing of the declaration in FORM GSTR-1 for the month of September, 2020.
  • The accessibility of 110% of the combined value of the eligible credit existing in respect of debit notes or invoices the particulars of which have been uploaded by the provider in GSTR-1 does not conclude that the overall credit can go beyond the tax amount as replicate in the total bills for the produce received by the taxpayer.
  • The surplus of Input Tax Credit availed, occurs out of understanding during this period, if any, shall be essential to be upturned in Table 4(B)(2) of the prescribed FORM, for the month of September, 2020. If the person is failed to reverse such surplus availed Input Tax Credit on account of increasing application of 36(4) of the CGST Rules would be represented as availment of not entitled ITC during the month of September, 2020.
  • While applying the restriction under subsection (4) of Rule 36 would be calculated cumulatively for the period February to August 2020 and the constraints for month of the September 2020 shall be calculated independently.
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The motive behind issuing this clarification is to provide assistance to the Taxpayer. Due to the outbreak of coronavirus pandemic, relief was provided to the taxpayers via Notification No 30/ 2020 CT, on the date 03.04.2020, whereas it had been approved that the condition made under rule 36 (4) of the CGST Rules to be examined cumulatively for the period of tax Feb 2020 to August 2020. Any alteration for the said periods shall be completed in Return in Form GSTR 3B to be provided for the month of September 2020.

Read our article:Types of GST Returns and Their Due Dates

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