UPDATE: No GST input if supplier doesn’t upload details of output: GST Council amends CGST rules to curb ineligible credit availing
-Rahul Maharshi
(rahul@vinodkothari.com) (finserv@vinodkothari.com)
The GST council in its 37th Meeting held on 20th September, 2019, had proposed to make amendments in the CGST Rules, 2017 (“Rules”) pertaining to matters relating to the extension of due date of filing of GSTR-3B GSTR-1 as well as voluntary requirement of filing of GST Annual return for registered person whose aggregate turnover is less than Rs. 2 crores.
One of the major amendment proposed was to restrict the claiming of input tax credit by the recipient, in case of mismatch in details uploaded by the supplier, to the extent of 20% over and above the value of uploaded details by the supplier.
The above proposed amendment has been brought into force through notification 49/2019- Central Tax [1] whereby the input credit availed by a registered person, the details of which have not been uploaded by the suppliers vide GSTR-1, the same should not exceed 20% of the eligible credit that has been uploaded by the suppliers.
As per the insertion in the CGST rules, 2017, viz. sub-rule (4) of rule 36:
“(4) 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 under sub-section (1) of section 37, shall not exceed 20 per cent. 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.”
For example, as per the books of the recipient, there is an input tax credit of Rs. 5,000 for a particular month from a particular supplier against 5 tax invoices having the GST component of Rs. 1,000 each. Post the amendment, the following scenarios shall arise:
Case-1: In case the supplier has uploaded all 5 invoices:
In case the supplier has duly uploaded the details of all the 5 invoices through filing the GSTR-1 for the particular month, the auto-populated GSTR-2A will have the details of all such invoices and accordingly the recipient will be eligible to claim the input tax credit of all 5 invoices
Case-2: In case the supplier has uploaded 3 invoices:
In case the supplier has uploaded less than 5 invoices, i.e. 3 invoices having GST component of Rs. 3,000, the recipient will be eligible to claim input tax credit at a maximum of Rs. 3,600 (viz. 3,000+20% of 3,000= 3,600).
Case-3: In case the supplier has not uploaded any invoice:
In case the supplier has not uploaded any invoice in the GSTR-1 of the respective month, the recipient will not be eligible to claim the input tax credit in that particular month. However, the recipient may claim the input as soon as the supplier uploads the details in the GSTR-1 and corresponding details reflect in the auto-populated GSTR-2A.
As a result of the said amendment, the recipient will be required to monitor the duly uploading of the invoices by the supplier in a more stringent manner, since omission of the same will result in reduction in claiming of input tax credit by the recipient.
Also, an important point of concern will be the change in accounting of the input tax credit in the books of the recipient. The excess claim over 20% of the eligible input tax credit will require allocation against the invoices of which the input tax credit would pertain to.
Continuing the above example viz. Case 2, where the supplier has uploaded 3 invoices, how will the recipient allocate the said portion of 20% viz. Rs. 600 if the recipient claims input tax credit at the excess of 20%. The recipient has to allocate the said amount against portion of particular invoices.
The above move may be seen as a way to monitor the claiming of inputs by the recipients as well as a check on the supplier for uploading the returns on a regular basis. However, there are pertinent issues which require further clarification from the department.
[1] http://www.cbic.gov.in/resources//htdocs-cbec/gst/notfctn-49-central-tax-english-2019.pdf;jsessionid=15BA096E92769114F368D806E28B8FF5
Suppose, if the supplier failed to upload the GSTR 1 before the due date (i.e. 10th / 11th of subsequent month), then, the said amount will not appear in GSTR 2B. In that case, whether the service receiver has to forego for that amount ?? Please clarify.
I also have the same question. As one of my supplier has filed the GSTR-1 on 20th and it has not appear in GSTR 2B, but is appearing on GSTR 2A. What to do…?
sir
There is no disucsussion on payment part. whrere a registered service receipent make 100% payment to a registrered service supplier but supplier faild to do gst 1, 3. or not able discharged gst liability which they had received from his principal.
If a service recipient make 100% payment his vendor than why he is not entitle to take 100% ITC and why only 20%. It means the due diligence are double whammy for a service recipient and not service supplier.
In other word, a service receipent making payment in advance to get services on time and bills made by servcie suplier in same month and he is getting payment in same month 100% than why service receipent is only able to go for 20%
Pls help.