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Clarification on new 120% restriction

GST Update : Clarification on new 120% restriction

CBIC has issued Circular No. 123/42/2019– GST dated 11th November, 2019 regarding restriction in availment of input tax credit in terms of sub-rule (4) of rule 36 of CGST Rules, 2017.

Highlights of this circular
  • This being a new provision, the restriction is not imposed through the common portal and it is the responsibility of the taxpayer that credit is availed in terms of the said rule. Therefore, the availment of restricted credit in terms of Rule 36(4) of CGST Rules shall be done on a self-assessment basis by the taxpayer.
  • The restriction of availment of ITC is imposed only in respect of those invoices/debit notes, details of which are required to be uploaded by the suppliers under section 37(1) and which have not been uploaded. Therefore, taxpayers may avail full ITC in respect of IGST paid on import, documents issued under RCM, credit received from ISD etc. which are outside the ambit of section 37(1).
  • The restriction imposed is not supplier wise.
  • Those invoices on which ITC is not available under any of the provision (say section 17) would not be considered for calculating 20 per cent of the eligible credit available.
  • The amount of input tax credit in respect of the invoices/ debit notes whose details have not been uploaded by the suppliers shall not exceed 20% of the eligible input tax credit available to the recipient in respect of invoices or debit notes the details of which have been uploaded by the suppliers under section 37(1) as on the due date of filing of the returns in FORM GSTR-1.
Details of suppliers’ invoices for which recipient is eligible to take ITC
20% of eligible credit where invoices are uploaded
Eligible ITC to be taken in GSTR3B to be filed by 20th Nov.
Case I
Suppliers have furnished in FORM GSTR-1 80 invoices involving ITC of Rs. 6 lakhs as on the due date of furnishing of the details of outward supplies by the suppliers.
Rs. 6,00,000 (i.e. amount of eligible ITC available, as per details uploaded by the suppliers) + Rs.1,20,000 (i.e. 20% of amount of eligible ITC available, as per details uploaded by the suppliers) = Rs. 7,20,000/-
  • Taxpayer may avail full ITC in respect of a tax period, as and when the invoices are uploaded by the suppliers to the extent of Eligible ITC.
Please click here for Circular.


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