CBIC clarifies on ‘confusing’ GST input tax credit rule

GST Collection Down
GST Collection Down

New Delhi, Nov 11 : In a relief to taxpayers, the Central Board of Indirect Tax and Customs has clarified that a new rule announced last month, limiting input tax credit (ITC) claims to 20 per cent of the eligible amount where invoice matching has not been done and uploaded by the suppliers, would not be applicable in respect of the IGST paid on imports and GST paid under the reverse charge mechanism.

The new rule, announced by CBIC on October 9, limited the scope of input tax credit in respect of invoices or debit notes, the details of which have not been uploaded by the suppliers to 20 per cent of the eligible amount. So, if ITC claim of say Rs 10 lakh was being claimed but documents supporting only Rs 6 lakh were uploaded, the total ITC applicable remained RS 6 lakh plus 20 per cent of Rs 6 lakh ie Rs 1.2 lakh (total Rs 7.2 lakh).

The October 9 notification caused a lot of confusion over the method of calculating this 20 per cent amount, the cut-off date and also whether it was to be calculated supplier-wise or on a consolidated basis.

It has now been clarified that the 20 per cent rule will not be applied supplier-wise but suppliers can use it on a consolidated basis. But while applying the new rule, the ITC should not be over and above the original claim presented by the suppliers to the tax department through online submissions in respective forms.

The CBIC has also clarified, that if under the 20 per cent rule, balance ITC claims of suppliers remain, thes can be claimed by the taxpayer in any of the succeeding months provided details of requisite invoices are uploaded by them. The taxpayer can claim proportionate ITC as and when details of some invoices are uploaded by the suppliers.

In order to prevent use of fake GST invoices for availing input tax, the government had last month made it compulsory to match the invoices uploaded by the suppliers in their GSTR1 forms before buyers can avail Input Tax Credit in their GSTR-3 returns.

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