The total ITC claimed should not be more than 120% of the credit available as per Invoices / Debit notes appearing in GSTR-2A – Rule 36(4)

1. New sub-rule 36(4) has been inserted to specify that the total credit availed on invoices & Debit notes not appearing in GSTR-2A should not exceed 20% of the matched and eligible credit.
2. The effective date for the same haven’t beennotified. Hence, the same shall be effective from the date of notification i.e. 09-Oct-2019

3. The concept of 20% additional credit has beenwidely mis-understood by the trade and professionals. To clarify, the same has been explained with an illustration below:
Assume The Following:
  • The total credit as per the Books of accounts is A = Rs. 500/-
  • The total eligible credit of invoices in GSTR-2A matching with invoices in books of accounts is  B = Rs. 200/
  • The total credit if invoices only in GSTR-2A is C = Rs. 100/-
       4. Further, the period forwhich the above rule should be applied and the frequency of the same has not been specified.
       5. Till date, though thedepartment has issued many notices related to the differences between the credit as per GSTR-2A & 3B, there was no absolute provision to deny the credit on that basis.
       6. Hence, to get a legal back up and also to makemore emphasis on credit based on GSTR-2A, new sub-rule has been inserted to specify that the credit availed by the supplier should be supported by the entries in GSTR-2A. However, relaxation has been provided to the extent of 20% of the matched credit.
       7. Although there are multiple arguments on thelegal ramification of the amendment, the compliance of the same would lay a good path for the compliance with Annx-2 of new return formats.