GST Latest update circular 123/42/2019 dt.11.11.19
Now there are lots of confusions arrised? how to avail ITC in form 3B by filling this month by 20th November. I tried to give clarity:-
And in respect of SME purchases, i.e. Suppose purchases of goods from the small SME suppliers whose required to files quarterly GSTR-1 than; Restriction of 20% is to be reckoned as on the due date of filing of returns in FORM GSTR-1 of the suppliers for the said tax period. Taxpayer may have to ascertain the same from his auto populated FORM GSTR 2A as available on the due date of filing of FORM GSTR-1 under Section 37(1). It means if buying from SME vendors, whatever ITC reflected in 2A on 11th of the month get 120% of total ITC. Its may happen SME suppliers purchase ITC not reflected on monthly basis as those are required to file quarterly GSTR-1. Hence in that SME purchases situations cash flow of GST payments going to be hits monthly on industries. So government should allow to SME vendors to keep updates their invoices on regular monthly basis eventhough GSTR-1 filling due on quarterly basis. Presently if SME vendor want to update his october month invoices he can't do that, since October month portal is disable for him, it will enable once quarter end i.e. in the month of December? Here GSTN should atleast thinks about SME vendors to atleast allow them to regular updates their invoices enable to take ITC by the big industries/ company, otherwise those SME kept out from the market. Suppose during the month of October a company entire purchases from SME suppliers, while calculating ITC on 11 November from form 2A found nothing reflected ITC in auto population in form 2A, since those suppliers required to fill quarterly GSTR-1, although if company give directions to suppliers to file GSTR-1 in order to get ITC, SME suppliers can't do so since portal not allow to upload invoices by those suppliers who have choosen quarterly options. Hence the company have to pay GST even though ITC available in books but not populated in monthly 2A rather in quarterly.
In view of ambiguity, we can take a stand to take entire ITC of those suppliers (SME also) who are regularly files their GSTR-1, restrictions of rule 36(4) can be checked at year end March for GST audit purpose.
In order to smooth functioning of main objective of restriction imposed in rule 36(4) of CGST rules, government should immediately implement e-invoice to SME so that above situation not arrise. What the purpose government came out this notification w.e.f. 9.10.2019, can be fruitful!
Now understand FAQ of ITC with the help of examples:-
Now there are lots of confusions arrised? how to avail ITC in form 3B by filling this month by 20th November. I tried to give clarity:-
This being a new provision, the restriction is not imposed through the common portal and it is the responsibility of the taxpayer to calculate ITC on its own while filling form 3B on the basis of form 2A at each month interval.
This means going forward, it will be mandatory for the buyers to match the ITC claimed with the details uploaded by the vendors. For example, say in the month of April, the input tax credit available (as per books) is Rs 1,500. Out of this, certain vendors wherein input tax credit involved is say Rs 500 have not filed their GSTR-1. Now, due to amendment, the buyer can avail ITC only to the extent of Rs 1,200 (i.e. 120% of R 1,000) and not 1,500.
This restriction will actually mean that the Companies need to monitor whether the suppliers are uploading their returns on regular basis. Most Companies are likely to feel the pinch of the amendment.
This means going forward, it will be mandatory for the buyers to match the ITC claimed with the details uploaded by the vendors. For example, say in the month of April, the input tax credit available (as per books) is Rs 1,500. Out of this, certain vendors wherein input tax credit involved is say Rs 500 have not filed their GSTR-1. Now, due to amendment, the buyer can avail ITC only to the extent of Rs 1,200 (i.e. 120% of R 1,000) and not 1,500.
This restriction will actually mean that the Companies need to monitor whether the suppliers are uploading their returns on regular basis. Most Companies are likely to feel the pinch of the amendment.
In respect of purchases from vendors having turnover exceeds 1.50 cr. GSTR-1 for October month is over for turnover more than Rs.1.5 crore, hence whatever ITC reflected in 2A form as on 11 Nov. get ITC not exceeding 20% of that in form 2A.
And in respect of SME purchases, i.e. Suppose purchases of goods from the small SME suppliers whose required to files quarterly GSTR-1 than; Restriction of 20% is to be reckoned as on the due date of filing of returns in FORM GSTR-1 of the suppliers for the said tax period. Taxpayer may have to ascertain the same from his auto populated FORM GSTR 2A as available on the due date of filing of FORM GSTR-1 under Section 37(1). It means if buying from SME vendors, whatever ITC reflected in 2A on 11th of the month get 120% of total ITC. Its may happen SME suppliers purchase ITC not reflected on monthly basis as those are required to file quarterly GSTR-1. Hence in that SME purchases situations cash flow of GST payments going to be hits monthly on industries. So government should allow to SME vendors to keep updates their invoices on regular monthly basis eventhough GSTR-1 filling due on quarterly basis. Presently if SME vendor want to update his october month invoices he can't do that, since October month portal is disable for him, it will enable once quarter end i.e. in the month of December? Here GSTN should atleast thinks about SME vendors to atleast allow them to regular updates their invoices enable to take ITC by the big industries/ company, otherwise those SME kept out from the market. Suppose during the month of October a company entire purchases from SME suppliers, while calculating ITC on 11 November from form 2A found nothing reflected ITC in auto population in form 2A, since those suppliers required to fill quarterly GSTR-1, although if company give directions to suppliers to file GSTR-1 in order to get ITC, SME suppliers can't do so since portal not allow to upload invoices by those suppliers who have choosen quarterly options. Hence the company have to pay GST even though ITC available in books but not populated in monthly 2A rather in quarterly.
In view of ambiguity, we can take a stand to take entire ITC of those suppliers (SME also) who are regularly files their GSTR-1, restrictions of rule 36(4) can be checked at year end March for GST audit purpose.
In order to smooth functioning of main objective of restriction imposed in rule 36(4) of CGST rules, government should immediately implement e-invoice to SME so that above situation not arrise. What the purpose government came out this notification w.e.f. 9.10.2019, can be fruitful!
Now understand FAQ of ITC with the help of examples:-
Restriction in availment of input tax credit in terms of sub-rule (4) of rule 36
In the illustrations, say a taxpayer “R” receives 100 invoices (for inward supply of goods or services) involving ITC of Rs. 10 lakhs, from various suppliers during the month of Oct, 2019 and has to claim ITC in his FORM GSTR-3B of October, to be filed by 20th Nov, 2019.
Refer case 1/2/3 in link.
Balance ITC in subsequent month
Full ITC of balance amount may be availed, in present illustration by “R”, in case total ITC pertaining to invoices the details of which have been uploaded reaches Rs. 8.3 lakhs (Rs 10 lakhs /1.20). In other words, taxpayer may avail full ITC in respect of a tax period, as and when the invoices are uploaded by the suppliers to the extent Eligible ITC/ 1.2.
Download link for examples-
http://globaltaxation.in/sd-uploads/files/Example_ITC_restrictions.pdf
Thanks & Regards
CA. Ashwani Rastogi
Partner, ARJS & Associates
M.Com, FCA, ACS, FAFD
Chartered Accountants
011-42137042, +91 9990999281
Office:- 2029, Bank Street, Karol Bagh,
New Delhi 110005 (India)
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