How to do Compliance of GST ITC as per GSTR 2A - GSTR 2B - Rule 36(4) in GSTR 3B of September, 2020

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Video by CA Bimal Jain explaining How to do Compliance of GST ITC as per GSTR 2A - GSTR 2B - Rule 36(4) in GSTR 3B of September, 2020.

#GSTR3B #GSTR2A #GSTITC

Let us understand important compliance to be undertaken by the taxpayer while filing GSTR 3B return for the month of September 2020.

Rule 36 sub-rule (4) of the CGST Rules, 2017 imposed capping provisions for availment of input tax credit on invoices/ debit notes which are not being uploaded by the supplier in their GSTR 1 and hence not reflected in GSTR 2A. Initially, with effect from 9th October 2019 such input tax credit availment was restricted to 20%. However, the capping on input tax credit was reduced from 20% to 10% effective from 1st January 2020.

It is important to note that while calculating capping of input tax credit as per rule 36(4), following input tax credit are not to be considered-
1. Input tax credit available on reverse charge mechanism (RCM);
2. IGST credit on import of goods;
3. Input Service Distributor credit;
4. Transitional credit; or
5. Any credit which is reversed and re-availed.

Thus, it is important to compare the input tax credit as reflected in GSTR 2A. As per circular 123 dated 11th November 2019, GSTR 2A should be downloaded on 11th of next month.

Notification no. 30/2020, pertaining to rule 36(4),kept compliance of rule 36(4) in ambience for the period February 2020 to August 2020 due to COVID 19. Hence, cumulative effect is to be given while filing GSTR 3B for the month of September 2020.

Due to various reasons, some are stated hereunder, the working capital gets blocked in the hands of the recipient if the input tax credit is not reflected in GSTR 2A-
1. If supplier is filing GSTR1 on quarterly basis;
2. If supplier is filing GSTR1 after due date;
3. If supplier by mistake mentions entry of B2B purchases under B2C.

Notably, provisions of rule 36(4) of the CGST Rules is contrary to provisions of section 41, section 42 and section 43 of the CGST Act.

Notably, GSTR 2B is also available from the month of August 2020. However, GSTR 2B is not having legal sanity. As per correct provisions, rule 36(4) should be followed as per notification 30/2020.

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