Input Tax Credit (ITC) matching – GSTN- not ready- A thorny issue for the department and the assessees. It has been 3 years and 3 months since the inception of GST, one would expect the early teething problems were overcome, and the new radical indirect tax regime would be up and running! Although, due to various factors, including the recent pandemic, we are seeing continuous amendments, delays in implementation and lack of a dependable infrastructure. Rule 36(4), i.e. the ITC matching and claim based on vendor GSTR filings is one such insertion into the law which is creating more harm than good. In this article, we have analysed the impact, practical suggestions, and also touched upon the validity of Rule 36(4) in GST law.
ITC reconciliation as per Rule 36(4)
In terms of Section 16 read with Rule 36(4) inserted w.e.f. 9th October 2019, ITC can only be claimed by an assessee based on the outward supply details (tax invoice, CN/DN) uploaded by the vendor in their GSTR-1. To provide some room for filing errors/delay in filing, etc. an ad-hoc additional 20% (upto December 2019)/10% (from January 2020 onwards) limit was provided. It has further been reduced to 5% (from January 2021 onwards).
Note: The ITC rule restriction does not apply to ITC on – Import of goods, Input Service Distributor invoices and under reverse charge mechanism.
Various law pronouncements to the topic have been listed below:
Read more on: https://taxguru.in/goods-and-service-tax/new-cgst-rule-364-itc-matching-impact-validity.html
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