Relaxation in availment of GST Input Tax Credit due to Covid-19 Pandemic & Lockdown

The government has temporarily lifted restrictions imposed on businesses to avail GST credit for February to August, a move that would help businesses tide over tight economic conditions following the outbreak of the novel coronavirus.

Relaxation of Provision Under Rule 36(4): In Terms of Notification No. 30/2020, a proviso has been inserted in CGST Rules 2017 to provide that the condition as stated in Rule 36(4) of the CGST Rules, 2017 shall not apply to input tax credit availed by the registered person in the returns in FORM GSTR-3B for the months of February 2020, March 2020, April 2020, May 2020, June 2020, July 2020 and August, 2020, but that the said condition shall apply cumulatively for the said period in the return in FORM GSTR-3B for the tax period of September, 2020 shall be furnished with cumulative adjustment of ITC.

The condition to avail credit in excess of 10 percent of the invoices uploaded for February-August, according to a government notification, will have to be cumulatively adjusted in GSTR-3B returns for September. Since January, input tax credit claims had been restricted to the extent of 10 percent of the eligible credit if corresponding invoices were not uploaded by the taxpayer’s suppliers. This was done to curb fake ITC claims and help the government increase GST revenues.

This (relaxation) means taxpayers will be able to claim input tax credit for those supplies as well, for which, the invoices have not been uploaded by their suppliers for February-August.

  

“This would provide much needed relief to taxpayers in their cash flows, considering the possible aftermath of the unprecedented slowdown due to Corona virus pandemic.