Restriction in Claiming ITC

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 Sections 37, shall not exceed [5 percent] 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 Sections 37”.

 The above mentioned provision practically means that in case if the supplier of goods and services has not filed its returns under GSTR-1 then in such a scenario the tax payer would only be able to avail ITC as shown under GSTR-2B +5%, against the total ITC available to him. For e.g. Total ITC which is actually available to a particular taxpayer is 5 lakhs because of various purchases which he made. But not all suppliers have filed their returns under GSTR-1 or not all invoices have been uploaded by the supplier and the ITC as reflected in their GSTR-2B is Rs. 4 lakh only, then in those cases total ITC which the tax payer can avail benefit of, while filing his returns under GSTR-3B would be Rs.4,20,000/- (4,00,000 + 5%) against the total ITC of Rs.5 lakhs for which is eligible.

The Government is putting their responsibility on us. If we wants to claim all ITC we have to make sure that all our suppliers should file their GSTR-1 on or before 11th of every month. Here after we cannot plan what amount we have to pay as GST at the end of the month. We have to wait till 12th of every month for the auto generated 2B to know the actual ITC of the previous month.

Changes in E Way Bill

As we Know As per Rule 138 of the CGST Rules, 2017, every registered person who causes movement of goods (which may not necessarily be on account of supply) of consignment value more than `50000/- is required to furnish above mentioned information in part A of e-way bill.

Earlier the validity of e-way bill depends on the distance to be travelled by the goods. For a distance of less than 100 Km the e-way bill will be valid for a day from the relevant date. For every 100 Km thereafter, the validity will be additional one day from the relevant date. Now the validity of E way bill was narrowed to 50% by increasing the distance from 100 km to 200km. For Eg. Earlier to reach 500km we can take upto 5 days to deliver the goods (500km / 100km = 5 days). Now within 2 ½ days we have to deliver the goods (500 km / 200 km = 2 ½ Days).

Restriction to avail 100% ITC

As per the New Rule 86B was introduced under GST and it takes effect from 1st January 2021 is applicable only where the value of taxable supply other than exempt and export in a month exceed Rs.50 Lakhs. The taxpayer is now been allowed to avail ITC is 99% of the total output and remaining 1% has to be paid through cash ledger.

Certain exceptions were provided to the above restriction

• It’s not applicable to those who paid more than 1 Lakh as Income Tax for last two financial years.
• It’s not applicable to those who received refund more than 1 lakh in the preceding financial year on account of export under LUT/Bond or inverted tax structure.
• If the registered person discharged his liability towards output tax through the electronic cash ledger for an amount of which is in excess of 1% of the total output tax liability, applied cumulatively up to the said month in the current financial year.
• If the registered person is Government Department , Public Sector undertaking , Local Authority or statutory body