GST input tax credit restriction new rules

GST input tax credit restriction new rules.

The restriction on the availability of input tax credit under GST in respect of invoices or debit notes CBIC inserted the new provision under rule 

as per the new provision, the registered person allow availing the input tax credit only 20% of the eligible credit against the details of which have not been uploaded by the suppliers under sub-section (1) of section 37 for the particular month/period vide Notification No. 49/2019 Dt: 09th October 2019

There was no such restriction until now – input tax credit was claimed by taxpayers on the basis of self-assessment.

This rule will lead to high complications in terms of compliance, returns, and accounting matters, and also affect the working capital and cash flow issue to the taxpayer.

The industry and tax professionals are already giving several requests and representations to defer this rule due to complications.

To capture and comply with this rule in accounting perspective along with the control and GSTR-2A reconciliation and GSTR-3B return reconciliation with the books we should have the detailed GST ledger accounts in our chart of accounts.

• CGST Output ledger- (by state) – This will be used to account for your CGST output liability on your supply for the respective states.
• 
  
• SGST Output ledger – (by state) – This will be used to account for your SGST output liability on your supply for the respective states.
• 
  
• IGST output ledger – (by state) – This will be used to account for your IGST output liability on your supply for the respective state.
• 
  
• Provisional Credit ledger- CGST- (State) This will be used to account the 10% credit which we are taking based on the eligible matched credit in our return by state
• 
  
• Provisional Credit ledger- SGST- (State) This will be used to account the 10% credit which we are taking based on the eligible matched credit in our return by state
• 
  
• Provisional Credit ledger- IGST-(State) This will be used to account for the 10% credit which we are taking based on the eligible matched credit in our return by state.
• 
  
• Input credit available in GSTR-2A can be reconciled matched till the date of filing of your GSTR-3B return, so accordingly you need to pass the entries based on your period closing date.
• 
  
• In case supplier uploaded the invoice and its reflecting in GSTR-2A but you have not received the same- ultimately you cannot avail the input credit
• 
  
• In case we have taken the credit but supplier not uploaded the invoice, this credit not available in GSTR-2A hence unable to claim.
• 
  
• In case mismatch due to invoice number, amount or tax amount- first we need to correct the mistakes for reconciliation