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Rule 36(4) Adjustment of Total Shortfall of Input Tax Credit

How to Calculate and Adjust the Shortfall of Input Tax Credit claimed in GSTR as per Rule 36(4)

Rule 36(4) describes the mechanism of claiming the Input Tax Credit (ITC) on the Invoices reflecting under Form GSTR-2A. In order to claim the eligible Input Tax Credit (ITC), the supplier should furnish the information in their respective Form GSTR-1/IFF for the relevant tax period.

In the absence of Invoices on which Input Tax Credit (ITC)is to be claimed under GSTR-2A, the restriction would apply thereby restricting the amount of eligible ITC.

The implication of restriction results in proper documentation/ working paper in support of Input Tax Credit (ITC)claimed in the respective GSTR.

Notification No. 49/2019 – Central Tax dated 9th October, 2019

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As per the notification after sub-rule (3) of Rule 36, sub-rule (4) was inserted as

“Input tax credit to be availed by a registered person in respect of invoices or debit notes, the details of which have not been uploaded by the suppliers u/s 37(1), shall not exceed 20%. of the eligible credit available in respect of invoices or debit notes the details of which have been uploaded by the suppliers u/s 37(1).”

Communication between GST Buyers and Suppliers on the GST portal

In the absence of Invoices on which ITC is claimed is not reflecting under GSTR-2A, the taxpayers were allowed to claim ITC only to the extent of variation of a maximum of 20% of eligible ITC reflecting in their Form GSTR-2A. [w.e.f. 9th October 2019]

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1st Amendment

Rule 36(4) vide Notification No. 75/2019 – Central Tax dated 26th December 2019 whereby the variation limit of 20% on eligible ITC reduced to 10%. The said changes come into effect from 1st January 2020.

2nd Amendment

Notification No. 94 /2020 – Central Tax dated 22nd December 2020

Further limit of claiming Input Tax Credit (ITC)in excess of ITC reflecting in GSTR-2A reduced to 5% from 10%.

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Calculation of Input Tax Credit (ITC) Adjustment

MonthITC as per BooksITC as per GSTR-2AITC availed in GSTR-3B
July 2021450031004500
August 2021390021003900
September 2021310054003100 (reverse Rs.370)
Total1150010600*11,130
ITC as per 2A * 105%11,130
ITC as per Books11,500
Excess Claimed in GSTRRs.11,500 (minus) Rs.11,130 = Rs.370

Note

Adjustment of total shortfall of Rs.370 ITC as per Rule 36(4) shall be done in June 2021 GSTR “without Interest”.

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