ITC CLAIM 120% OF GSTR-2A

[SIVARAMA KUMAR]

With the introduction of rule 36(4) i happen to see in many forums that if your existing liability in 3B is say ₹ 10,000/- and eligible credit under 2A is 5000 . the eligible claim for the month would be 120% of 5000 (₹ 6000) can be adjusted and balance can be carried forward to next month.

My query is do i have to pay the excess in cash for the month over and above ₹ 6000/- if there exists an output liability of ₹ 7000/- because unless you setoff your entire liability GSTR 3B could not be filed. or does the portal will allow to submit the GSTR 3B return considering the available credit in GSTR 2A. Will it not be an additional burden to the taxpayers as their working capital is being continuously eroded by these new provisions . Earlier the adjustment mode was altered, giving first preference to IGST, till its erosion and now this new mechanism would still add fuel .

Genuine replies awaited.

[Rajagopalan Ranganathan]

Sir,

If your liability is more than the eligible credit then you have to pay the balance amount in cash only. Government brought this cap to prohibit the receiver from taking credit on the basis of fake invoice on ground that I am in possession of invoice and i have paid the amount indicated in the invoice. But the moot question Whether you have received the goods/service indicated in the invoice. If a supplier has failed to upload the invoices issued during a particular tax period there should be some reason. As receiver of the goods/services you may withheld payment of tax component shown in the invoice until the same is uploaded by the supplier. If you say it will cause erosion of your capital Government will also say its exchequer is also eroded tax revenue lawfully belong to it. The only solution for this type of problem is the supplier is duty bound to upload the invoices issued by him with all correct particular required to be indicated as per CGST/SGST Rules. Otherwise the hicup will continue for the future.

[PAWAN KUMAR]

Dear Sir,

I fully agree with the answer of Sh.Rajagopalan Sir. The government has made this provision to curb the claim of ITC which earlier allowed as provisional basis on the basis of fake invoices/in cases where no supply being taken place.Although it will directly implact the cash flow of an assess due to restrict the eligible ITC in hand of the receiver assessee till the time the supplier upload invoices in his GSTR-1. overall it is reco of Prov.ITC and your claim and to be settled with the help of strong follow up.

[KASTURI SETHI]

A noose should be put around defaulter's neck (supplier) (who do not upload their sale invoice) instead of buyer's ( or service receiver) neck. This amendment by Govt. will not yield any fruitful result.

AI Summary

GST Rule 36(4) Limits Credit Claims to 120%, Excess Liability Must Be Paid in Cash to Prevent Fraudulent Claims A query was raised regarding the Goods and Services Tax (GST) rule 36(4), which allows claiming 120% of the eligible credit reflected in GSTR-2A. The concern was whether excess liability over this claim must be paid in cash, potentially affecting taxpayers' working capital. Respondents explained that any liability exceeding eligible credit must indeed be paid in cash, as the rule aims to prevent fraudulent claims based on fake invoices. They emphasized the importance of suppliers uploading accurate invoices to avoid such issues, suggesting that the rule impacts cash flow until compliance is achieved.