CBIC issued clarification relating to application of Rule 36(4) of the CGST Rules, 2017 cumulatively for the months of Feb to Aug, 2020
Vide Circular No. 123/42/2019- GST dated 11th November, 2019, various issues relating to implementation of sub-rule (4) of rule 36 of the CGST Rules, 2017 relating to availment of ITC in respect of invoices or debit notes, the details of which have not been uploaded by the suppliers under section 37(1) of the CGST Act, 2017 were clarified.
Keeping the situation prevailing in view of measures taken to contain the spread of COVID-19 pandemic, vide notification No. 30/2020- CT dated 03-04-2020, it had been prescribed that the condition made under sub-rule (4) of rule 36 of the CGST Rules shall apply cumulatively for the tax period February, March, April, May, June, July and August 2020 and that the return in FORM GSTR-3B for the tax period September, 2020 shall be furnished with the cumulative adjustment of ITC for the said months.
To ensure uniformity in the implementation of the said provisions across the field formations, the Board, in exercise of its powers conferred under section 168(1) of the CGST Act hereby clarifies certain issues in succeding paragraphs. It is re-iterated that the clarifications issued earlier vide Circular No. 123/42/2019- GST dated 11.11.2019 shall still remain applicable, except for the cumulative application as prescribed in proviso to sub-rule (4) of rule 36 of the CGST Rule, 2017.
Accordingly, all the taxpayers are advised to ascertain the details of invoices uploaded by their suppliers under section (1) of section 37 of the CGST Act for the periods of February 2020 to August 2020, till the due date of furnishing of the FORM GSTR-1 for the month of September, 2020 as reflected in GSTR-2As. Taxpayers shall reconcile the ITC availed in their FORM GSTR-3Bs for the period February, 2020 to August, 2020 with the details of invoices uploaded by their suppliers, till the due date of furnishing FORM GSTR-1 for the month of September, 2020.
The cumulative amount of ITC availed for the said months in FORM GSTR-3B should not exceed 110% of the cumulative value of the eligible credit available in respect of invoices or debit notes the details of which have been uploaded by the supplierr till the due date of furnishing of the statements in FORM GSTR-1 for the month of September, 2020.
It may be noted that availability of 110% of the cumulative value of the eligible credit available in respect of invoices or debit notes the details of which have been uploaded by the suppliers does not mean that the total credit can exceed the tax amount as reflected in the total invoices for the supplies received by the taxpayer i.e. the maximum credit available in terms of provisions of secrtion 16 of the CGST Act.
The excess ITC availed arising out of reconciliation during this period, if any, shall be required to be reversed in Table 4(B)(2) of FORM GSTR-3B, for the month of September, 2020. Failure to reverse such excess availed ITC on account of cumulative application of sub-rule (4) of rule 36 of the CGST Rules would be treated as availment of ineligible ITC during the month of September, 2020.
The manner of cumulative reconciliation for the said months in terms of proviso to subrule (4) of rule 36 of the CGST Rules is explained by way of illustration as below:-
| Tax Period |
Eligible ITC as per the provisions of Chapter V of the CGST Act and the rules made thereunder except rule-36(3) |
ITC availed by the taxpayer (recipient) in GSTR-3B of the respective months
|
Invoices on which ITC is eligible and uploaded by the suppliers till due date of Form GSTR-1 for the tax period Sep. 2020 | Effect of cumulative application of rule 36(4) on availability of ITC |
| February 2020 | 300 | 300 | 270 | Maximum eligible ITC in terms of rule 36(4) is 2450 + 10% = 2695. Taxpayer had availed ITC of 2750. Therefore, ITC of 55 [ 2750- 2695] would be required to be reversed. |
| March 2020 | 400 | 400 | 380 | |
| April 2020 | 500 | 500 | 450 | |
| May 2020 | 350 | 350 | 320 | |
| June 2020 | 450 | 450 | 400 | |
| July 2020 | 550 | 550 | 480 | |
| August 2020 | 200 | 200 | 150 | |
| Total | 2750 | 2750 | 2450 | |
| ITC reversal required to the extent of 55 | ||||
| September 2020 | 500 | 385 | 350 | 10% rule shall apply independently for September, 2020 |
| In the FORM GSTR-3B for the month of September, 2020, the tax payer shall avail ITC of 385 under Table 4(A) and would reverse ITC of 55 under Table 4(B)(2). | ||||
