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.

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.