As per the new sub-rule (4) inserted in rule 36 of the Central Goods and Service Tax Rules, 2017, a taxpayer filing GSTR-3B can claim provisional Input Tax Credit (ITC) only to the extent of 10% of the eligible credit available in GSTR-2A.
The ITC claim was earlier restricted to 20% for the period from 9 Oct 2019 till 31 Dec 2019.The new percentage applies from 1 Jan 2020 onwards only.
The Tax payer should compare ITC in his books with ITC in GSTR 2A. ITC reflecting in GSTR 2A shall be considered as eligible ITC that can be claimed.
The provisional ITC amount will be restricted only to the extent of 10%* of the eligible ITC value already reflected in the GSTR-2A for that period.
Apart from the 10%* of eligible ITC which a taxpayer can claim as provisional credit, the balance tax liability will need to be paid in cash.
Say ITC available as per purchase register = Rs 1,00,000/-
But ITC available as per GSTR 2A= Rs 70,000/-
ITC that can be availed = 70,000+ 10% of 70,000 =Rs. 77,000/-
ITC not allowed for that month = Rs. 1,00,000-77000= Rs. 23,000/-
The balance ITC that has not been claimed as provisional ITC may be claimed in the succeeding months once details have been actually uploaded by the suppliers.
If a supplier has only uploaded part of the pending invoices in a later period, the taxpayer will be able to claim ITC only proportional up to 10% of these pending invoices uploaded. Say out of balance 23,000/- invoices for 20,000 have been uploaded by supplier next month , the recipient shall take credit for 20,000+ 10% of 20,000 = 22,000/- and balance 1,000/- shall still be left to be claimed.
But in NO CASE the recipient shall claim excess ITC that was entitled to claim.