Input Tax Credit will now be restricted for buyers if suppliers have not
uploaded the invoice and deposited tax. i.e, Buyers will be able to claim only 20%
provisional ITC.
Means, provisional ITC will be a maximum of 20% of the
ITC for which invoices have been uploaded by suppliers.
Notification details:
The CGST (Sixth Amendment) Rules, 2019 were
notified on 9 October 2019 in Notification No. 49/2019- Central Tax and
published in the official gazette on the same date.
Details of
Computation:
If a taxpayer is filing GSTR-3B regularly where outward
supplies and provisional ITC is claimed and taxes are paid. While filing
GSTR-3B, he should reconcile purchase register and expense ledger with GSTR-2A
for that period. Suppose ITC as per GSTR-2A is Rs 20,000 and as per
taxpayer’s own records, ITC should be Rs 30,000.
Previously, before this provisional ITC rule, he could have
claimed the entire Rs. 30,000 based on his own records. Later, at a subsequent
month he could carry out a detailed reconciliation and adjust this provisional
claim against information as per GSTR-2A.
But now his provisional ITC claim cannot exceed Rs 24,000.
Rs 20,000 -Actual ITC based on information available in
GSTR-2A
Rs 4,000 - Provisional ITC based upon the 20% rule, i.e. 20% of Rs 20,000