CIRCULAR NO. 142/12/2020- GST [F. NO.

CBIC/20/06/14/2020-GST]

CLARIFICATION RELATING TO APPLICATION OF SUB-RULE (4) OF RULE 36 OF THE CGST

CIRCULAR NO. 142/12/2020- GST [F. NO. CBIC/20/06/14/2020-GST], DATED 9-10-2020

Vide Circular No. 123/42/2019 - GST dated 11th November, 2019, various issues relating to implementation of
sub-rule (4) of rule 36 of the Central Goods and Services Tax Rules, 2017 (hereinafter referred to as the CGST
Rules) relating to availment of input tax credit (ITC) in respect of invoices or debit notes, the details of which
have not been uploaded by the suppliers under sub-section (1) of section 37of the Central Goods and Services
Tax Act, 2017 (hereinafter referred to as the CGST Act) were clarified.
2. Keeping the situation prevailing in view of measures taken to contain the spread of COVID-19 pandemic,
vide Notification No. 30/2020-CT, dated 3-4-2020, it had been prescribed that the condition made under sub-
rule (4) of rule 36 of the CGST Rules shall apply cumulatively for the tax period February, March, April, May,
June, July and August, 2020 and that 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.
3. To ensure uniformity in the implementation of the said provisions across the field formations, the Board, in
exercise of its powers conferred under section 168(1) of the CGST Act hereby clarifies certain issues in
succeeding paragraphs.
3.1 It is re-iterated that the clarifications issued earlier vide Circular No. 123/42/2019 - GST dated 11-11-2019
shall still remain applicable, except for the cumulative application as prescribed in proviso to sub-rule (4) of
rule 36 of the CGST Rules. Accordingly, all the taxpayers are advised to ascertain the details of invoices
uploaded by their suppliers under sub-section (1) of section 37 of the CGST Act 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.
3.2 Taxpayers shall reconcile the ITC availed in their FORM GSTR-3Bs for the period February, 2020 to
August, 2020 with the details of invoices uploaded by their suppliers of the said months, till the due date of
furnishing FORM GSTR-1 for the month of September, 2020. The cumulative amount of ITC availed for the
said months in FORM GSTR-3B should not exceed 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 under
sub-section (1) of section 37 of the CGST Act, till the due date of furnishing of the statements in FORM
GSTR-1 for the month of September, 2020.
3.3 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 under sub-section (1) of
section 37 of the CGST Act 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 section 16 of the CGST Act.
3.4 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 of sub-rule (4) of rule 36 of the CGST Rules would
be treated as availment of ineligible ITC during the month of September, 2020.
4. The manner of cumulative reconciliation for the said months in terms of proviso to sub-rule (4) of rule 36 of
the CGST Rules is explained by way of illustration, in a tabulated form, below.
TABLE I
Tax period Eligible ITC as per ITC availed Invoices on which ITC Effect of cumulative application of
the provisions of by the is eligible and rule 36(4) on availability of ITC.
Chapter V of the taxpayer uploaded by the
CGST Act and the (recipient) suppliers till due date
rules made in GSTR-3B of FORM GSTR-1 for
 thereunder, except of the the tax period of
rule 36(4) respective September, 2020
months
Feb, 2020 300 300 270 Maximum eligible ITC in terms of
rule 36 (4) is 2450 + [10% of 2450]
March, 400 400 380
=2695. Taxpayer had availed ITC of
2020
2750. Therefore, ITC of 55 [2750-
April, 500 500 450 2695] would be required to be
2020 reversed as mentioned in para 3.4.
above.
May, 2020 350 350 320
June, 2020 450 450 400
July, 2020 550 550 480
August, 200 200 150
2020
TOTAL 2750 2750 2450
ITC Reversal required to the extent of 55
September, 500 385 350 10% Rule shall apply independently
2020 for September, 2020
In the FORM GSTR-3B for the month of September, 2020, the tax payer shall avail ITC of 385 under Table
4(A) and would reverse ITC of 55 under Table 4(B)(2)
5. It is requested that suitable trade notices may be issued to publicize the contents of this Circular. Hindi
version will follow.
6. Difficulty, if any, in implementation of this circular may please be brought to the notice of the Board.
■■