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By: Dr. Sanjiv Agarwal
January 1, 2021
All Articles by: Dr. Sanjiv Agarwal       View Profile
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While Section 16 of CGST Act, 2017 provides for eligibility and conditions for taking input tax credit, Rule 36 of CGST Rules, 2017 prescribes documentary requirements and conditions for claiming input tax credit.

Presently, Rule 36(4) provides that

“(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 10 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.”   

Vide Notification No. 94/2020-Central Tax dated 22.12.2020, various amendments have been made in Rules. Following two amendments have been made in Rule 36(4) of CGST Rules, 2017.

  • Return u/s 37(1) has to be furnished, not merely uploaded by the supplier
  • The availment of credit to be taken has been restricted to 5% instead of 10% presently.

This change is effective from 1st January, 2021

Thus, credit of Input Tax for the invoices not furnished is now restricted to 5% of the tax for invoice details furnished effective from 01.01.2021. Earlier the limit was 10%. Further, now merely the invoices being uploaded would not be sufficient to claim the credit of the input tax. 

The amended rule makes restrictions on ITC being taken stricter by curtailing the percentage of ITC to be taken and linking it to furnishing of GST return in Form GSTR-1. These restrictions are:

ITC claim in respect of invoices which are not uploaded by any vendor in its Form GSTR 1 or through Invoice Furnishing Facility (IFF) will now be allowed maximum upto 5% (currently it is 10%) of the invoices furnished by the vendors in their Form GSTR 1 or IFF Facility.

The new reduced limit of 5% shall be effective from January 01, 2021 i.e., it will apply to all invoices including invoices which are dated or issued on or after January 01, 2021.

It may be noted that the restriction of claiming input tax credit has been varied frequently and can be traced as follows:



01.07.2017 to 08.10.2019


09.10.2019 to 31.12.2019


01.01.2020 to 31.12.2020


W.e.f. 01.01.2021


Impact of Amendment

The 100% Input Tax Credit has to be availed based on invoices / debit notes, details of which have been furnished by the supplier.

In case, such details are not furnished in GSTR-1 by the supplier, then input tax credit can be availed upto 5% of such invoices. This limit is 10% presently but w.e.f. 01.01.2021; this limit will be 5% only. This will result in blocking of credit (funds) to the extent of limit prescribed and result in pressure on working capital of the taxpayer. Such restrictions has been stipulated without any fault or non-compliance of the taxpayer.

Taxable person claiming input tax credit should ensure and prevail upon suppliers to file timely returns.


By: Dr. Sanjiv Agarwal - January 1, 2021


Discussions to this article


Dear Experts,


I have a doubt on ITC availment. Please calrify.

I am a buyer. I am having GST Bills with GST amount of 50.00 Lakhs of November. Say 10 bills with total GST 40.00 Lakhs and one bill with GST 10.00 Lakhs.

Till filing my 3B on 20.12.2020, that one bill with GST10.00L was not reflected in my 2A.

So, Iam eligible to take ITC on 20.12.2020 for November is maximum of 44.00 Lakhs, right. though Iam having bills for 40.00 Lakhs reflected in 2A, I am eligible for 44.00 Lakhs, right.

My supplier who raised single bill with GST 10.00 lakhs is filing his GSTR-1 of November, on 25.12.2020 only after my filing of 3B happened on 20.12.2020. That suppliers bill will show in my 2A of November only after his filing date 25.12.2020, Am I right.

Now for December Iam having ITC bills for 30.00 Lakhs and all the bills are reflecting in 2A.

While filing my 3B on 20.01.2021, how much ITC can I take. For December portal shows 30.0L only for December in 2A. As per latest rules Iam eligible to take maximum of 30.00 + 5% = 31.50 lakhs only. But Iam eligible to take that balance amount of 6.00 L of November also, right. That 10.00 Lakhs bill of November will show in my 2A of November only though he filed after my 3B filing.

I should take 36.00 Lakhs in 3B of December (which is) November Balance 6.00 L + December acutals in 2A also total bills Iam having 30.00 Lakhs.

So, shall I take 36.00 lakhs in my December 3B on 20.01.2021. I should take. Is there any restriction will come in portal (or) whether it will allow me to take ITC of previous month pending + current month actuals (i.e) 36.00L and proceed.

Pls clarify

Dated: 02/01/2021

You cannot avail the ITC of 40 lakh for the month of November and in December you can claim 30 lakh credit along with 10 lakh of November

By: Heet Shah
Dated: 04/01/2021


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