New GST Rules regarding 20% Formula for Input Credit:- (Prem Shankar Mishra)

Amending the Central Goods and Services Tax Rules, 2017 by inserting a new clause (4) in Rule 36 the Government has sought to restrict the credit available to a Bonafide tax payer who has paid the tax and is entitled to the credit. The new rule requires that the Bonafide purchaser of goods and services needs to ensure that the person who supplied him the goods and or services has filed his GSTR1 return properly and has also included these details like his GSTN No etc. properly in the return filed by him. The new rules read as under :

Rule 36 Clause(4) – Input tax credit to be availed by a registered person in respect of invoices or debit notes, the details of which have not been uploaded by the suppliers under sub-section (1) of section 37, shall not exceed 20 per cent of the eligible credit available in respect of invoices or debit notes the details of which have been uploaded by the suppliers [in Form GSTR-1],"

The new rules, called the Central Goods and Services Tax (Sixth Amendment) Rules, 2019, came into effect on October 9.

Now the issue which comes forth from the above is that an assessee who has paid the input tax credit on his purchases cannot claim the credit unless the person who supplied him the goods or services files his GSTR1 which also means that apart from paying the taxes the assessee is the one who needs to ensure that the suppliers associated with him file their returns properly.