Analysis on ITC not Reflected in GSTR-2A restricted upto 20%

ITC in respect of invoices or debit notes, the details of which have not been uploaded by the suppliers in GSTR-1, shall not exceed 20% of the eligible credit available in respect of invoices or debit notes the details of which have been uploaded by the suppliers in GSTR-1. As a result of this amendment, regular matching of ITC with the details available in GSTR-2A will become necessary. Follow-up with non-compliant suppliers to be done on a regular basis now.

Analysis on Amended Rule 36 of CGST Act :- ITC in respect of invoices/ debit notes not uploaded by suppliers (i.e. not appearing in form GSTR-2A) cannot be avail in excess of 20% of the eligible ITC pertaining to invoices / debit notes uploaded by the suppliers. Following is the illustrative example for better understanding:


Actual ITC

Eligible ITC after amendment

Say total input amount for the month is Rs.



ITC appearing in form GSTR-2A of GST portal


60,000 [No change]

ITC not appearing on GST portal in GSTR-2A


60,000*20% = 12000; or
whichever is lower i.e. 12,000

Total eligible ITC to be claimed in GSTR-3B for the month


Restricted ITC under Rule 36(4)

40,000-12,000 =28,000


What does this mean for businesses
This means that businesses will now have to chase down their vendors to regularly upload their invoices every month if they want to claim the entire tax amount they paid on inputs or purchases. Previously, entities could self-assess their ITC claims on the basis of the invoice copy, without any such restrictions provided the criteria outlined in Section 16 of the CGST Act were fulfilled.
Restriction of mismatched ITC by 20 per cent would necessitate undertaking monthly reconciliation of purchase, credit register with GSTR 2A, and hence may increase the monthly compliance burden.

The logic behind CBIC’s decision
The government introduced the new rule to crackdown on fake ITC claims amid dwindling revenue collections. GST collections dropped sharply to a 19-month low of Rs 91,916 crore in September, mirroring a widening slowdown in economy triggered by shrinking consumer demand. This was the second straight month of decline in the mop-up, according to official data released by the finance ministry. In comparison, the tax collections stood at Rs 98,202 crore in August and Rs 94,442 crore mop-up in the year-ago period. The government’s monthly target is over Rs 1.1 lakh crore.

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