Central Board of Indirect Taxes and Customs (CBIC) has issued Circular No. 142/12/2020 dated 9th October, 2020 to provide clarification relating to a new proviso that has been inserted relating to conditions for claiming input tax credit as per the CGST Rules, 2017 for the months of February, 2020 to August, 2020.
Key Points of the Circular are:
1. A clarification has been issued to provide that the restriction on availment of input tax credit (ITC) where it has been stated that the amount of ITC in respect of the invoices/debit notes whose details have not been uploaded by the suppliers shall not exceed 10% of the eligible ITC available to the recipient in respect of invoices or debit notes the details of which have been uploaded by the suppliers in Form GSTR-1 shall continue to be applicable except for the new proviso that has been inserted that the said condition shall apply cumulatively for the period February, March, April, May, June, July and August, 2020 and the return in FORM GSTR-3B for the tax period September, 2020 shall be furnished with the cumulative adjustment of input tax credit for the said months in accordance with the condition above.
2. All the taxpayers are advised to ascertain the details of invoices uploaded by their suppliers for the periods of February, March, April, May, June, July and August, 2020, till the due date of furnishing of the statement in FORM GSTR-1 for the month of September, 2020 as reflected in GSTR-2As.
3. It may be noted that availability of 110% of the cumulative value of the eligible credit available in respect of invoices or debit notes the details of which have been uploaded by the suppliers does not mean that the total credit can exceed the tax amount as reflected in the total invoices for the supplies received by the taxpayer i.e. the maximum credit available in terms of provisions of the CGST Act,2017.
4. The excess ITC availed arising out of reconciliation during this period, if any, shall be required to be reversed in Table 4(B)(2) of FORM GSTR-3B, for the month of September, 2020. Failure to reverse such excess availed ITC on account of cumulative application would be treated as availment of ineligible ITC during the month of September, 2020.
For further details please refer the attached document.