GST Input Tax Credit will only be available if declared by supplier in GSTR 2A/2B w.e.f. 01.01.2022
Updated: Jan 5, 2022
It had been proposed by the Hon'ble Finance Minister, in the Budget 2021-22 vide the Finance Bill, 2021 to insert the new clause ‘(aa)’, after clause (a), in Section 16(2) of the Central Goods and Service Tax Act, 2017 (CGST Act, 2017), that lays down an additional condition to claim Input Tax Credit under GST based on GSTR-2A and newly introduced GSTR-2B through section 109 of the said bill.
Later on, that proposed Finance Bill, 2021 obtained the presidential assent vide Finance Act, 2021.
Section 109 of the Finance Act, 2021:
After clause (a), in sub-section (2) of Section 16, the following clause shall be inserted:
“(aa) the details of the invoice or debit note referred to in clause (a) has been furnished by the supplier in the statement of outward supplies and such details have been communicated to the recipient of such invoice or debit note in the manner specified under section 37.”
Accordingly, a new condition has been laid down to avail the ITC of inward supplies. Input Tax Credit (ITC) on invoice or debit note can be availed only when details of such invoice or debit note have been furnished by the supplier in his return of outward supplies (GSTR-1) as per section 37 of CGST Act, 2017 and such details have been communicated to the recipient of such invoice or debit note as prescribed under section 38 of the CGST Act, 2017.
Amendment vide section 109 of Finance Act, 2021 has been notified to be effective
The CBIC (Central Board of Indirect Taxes and Customs) vide Notification No. 39/2021–Central Tax dated December 21, 2021, notified the said amendments made vide Section 109 of the Finance Act, 2021 w.e.f. January 01, 2022.
Hence, with effect from January 01, 2022, the following conditions (including the new condition) need to be satisfied under Section 16(2) of the CGST Act for availing GST ITC on inward supplies of goods or services or both: with effect from January 01, 2022, the following conditions (including the new condition) need to be satisfied under Section 16(2) of the CGST Act for availing GST ITC on inward supplies of goods or services or both:
The recipient is in possession of the tax invoice or debit note issued by a supplier;
The details of the above-mentioned invoice or debit note have been furnished by the supplier in the statement of outward supplies and such details have been communicated to the recipient in the manner specified under Section 37 of the CGST Act;
The recipient has received the goods or services or both;
The tax charged in respect of such supply has been actually paid to the Government and
The recipient has furnished the return under Section 39 of the CGST Act.
From 01 January 2022 onwards, there will not be the relevance of the 5% limit mentioned in Rule 36(4) of the Central Goods and Services Tax Rules, 2017 (“CGST Rules”) to avail the ITC on invoices/debit notes not uploaded by the supplier in his GST return GSTR-1 because the recipient will not able to take ITC on the invoices/debit notes not furnished by the supplier. This amendment will prevent unnecessary litigations and writ petitions challenging the validity of Rule 36(4) of the CGST Rules that prescribes the similar condition with the 5% limit to avail ITC on invoices/debit notes not uploaded by the supplier in GSTR-1 (as amended vide Notification No. 94/2020- Central Tax dated December 22, 2020 w.e.f. January 01, 2021).
Therefore, the recipient will be able to take ITC of inward supplies only when the supplier furnishes the details of such inward supplies in his return of GST as outward supplies. So, the recipient has to make sure before taking ITC that the supplier has furnished details of such invoice/debit note in GSTR-1.
Read the full text of the notification…
Ministry Of Finance
(Department Of Revenue)
(Central Board Of Indirect Taxes And Customs)
New Delhi
Notification No. 39/2021–Central Tax | Dated: 21st December 2021
S.O. 5328(E).— In exercise of the powers conferred by clause (b) of sub-section (2) of section 1 of the Finance Act, 2021 (13 of 2021), the Central Government hereby appoints the 1st day of January 2022, as the date on which the provisions of sections 108, 109 and 113 to 122 of the said Act shall come into force.
[F. No. CBIC-20006/26/2021-GST]
RAJEEV RANJAN, Under Secy.
