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October 9, 2020

CBIC Clarifies with example on excess ITC avail from Feb to Aug shall be reversed in Sep 2020 GSTR3B

by facelesscompliance in GST Circular Notification

CBIC Clarifies with example on excess ITC avail from Feb to Aug shall be reversed in Sep 2020 GSTR3B

CBIC vide Circular No. 142/12/2020- GST dated October 09, 2020 issued clarification relating to application of sub-rule (4) of rule 36 of the CGST Rules, 2017 for the months of February, 2020 to August, 2020.

Vide Circular No. 123/42/2019 – GST dated November 11, 2019 various issues relating to implementation of sub-rule (4) of rule 36 of the Central Goods and Services Tax Rules, 2017 (hereinafter referred to as the CGST Rules) relating to availment of input tax credit (ITC) in respect of invoices or debit notes, the details of which have not been uploaded by the suppliers under sub-section (1) of section 37of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the CGST Act) were clarified.

Keeping the situation prevailing in view of measures taken to contain the spread of the COVID-19 pandemic, vide notification No. 30/2020-CT, dated April 03, 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 input tax credit 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 succeeding paragraphs.

It is re-iterated that the clarifications issued earlier vide Circular No. 123/42/2019 – GST dated November 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 Rules. Accordingly, all the taxpayers are advised to ascertain the details of invoices uploaded by their suppliers under subsection (1) of section 37 of the CGST Act for the periods of February, March, April, May, June, July and August, 2020, till the due date of furnishing of the statement in 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 of the said months, 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 suppliers under sub-section (1) of section 37 of the CGST Act, 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 under sub-section (1) of section 37 of the CGST Act 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 section 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, in a tabulated form, below.

Tax periodEligible ITC as per the provisions of Chapter V of the CGST Act and the rules made thereunder, except rule 36(4)ITC availed by the taxpayer (recipient) in GSTR – 3B of the respective monthsInvoices on which ITC is eligible and uploaded by the suppliers till due date of FORM GSTR-1 for the tax period of September, 2020
Feb, 2020300300270
March, 2020400400380
April, 2020500500450
May, 2020350350320
June, 2020450450400
July, 2020550550480
August, 2020200200150
TOTAL275027502450
Effect of cumulative application of rule 36(4) on availability of ITC.

Maximum eligible ITC in terms of rule 36 (4) is 2450 + [10% of 2450] = 2695. Taxpayer had availed ITC of 2750. Therefore, ITC of 55 [2750-2695] would be required to be reversed as mentioned in para 3.4. above.

ITC Reversal required to the extent of 55

Tax periodEligible ITC as per the provisions of Chapter V of the CGST Act and the rules made thereunder, except rule 36(4)ITC availed by the taxpayer (recipient) in GSTR – 3B of the respective monthsInvoices on which ITC is eligible and uploaded by the suppliers till due date of FORM GSTR-1 for the tax period of September, 2020Effect of cumulative application of rule 36(4) on availability of ITC.
September, 202050038535010% Rule shall apply independently for September, 2020
In the FORM GSTR-3B for the month of September, 2020, the taxpayer shall avail ITC of 385 under Table 4(A) and would reverse ITC of 55 under Table 4(B)(2)

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