GST DEPARTMENT STARTED SENDING NOTICES UNDER RULE 36(4) OF THE CGST RULES, 2017

We know that w.e.f. 09th Oct, 2019, the GST department has restricted ‘the ITC to be claimed in GSTR-3B return to 120% of the eligible credit based on invoices/debit notes uploaded by the suppliers in their GSTR-1 [Rule 36(4) of the CGST Rules, 2017].’

The extract of above rule is as under :

“(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 under sub-section (1) of section 37.”

Some taxpayers have filed their GSTR-3B return after 09th Oct, 2019, but have availed the ITC in contravention of Rule 36(4).

As ITC is not allowed beyond above mentioned limit, the GST department has started sending notices to those taxpayers, who have availed ITC in contravention of the said rule.

E-mails received by some taxpayers are as under :

Dear Taxpayer,

(1.) As you are aware, Rule 36(4) of the CGST Rules, 2017 notified w.e.f. 09.10.2019, restricts availment of credit to 120% of the eligible credit based on invoices/debit notes uploaded by the suppliers in their GSTR-1. From 1st Jan, 2020, the eligibility has got reduced to 110% of such eligible credit.

(2.) Records indicate that in your GSTR-3B return for Nov, 2019, you have availed credit of Rs. 3,63,830.88 more than the credit admissible under Rule 36(4) of the tax reflected in your GSTR-2A for the said period.

(3.) You are advised to reverse the amount of credit availed in excess. In case such credit has been utilized for paying tax, the same may be deposited through Form GST DRC-03 with applicable interest.

(4.) In case the opportunity for voluntary compliance as suggested is not availed, appropriate action for recovery of excess ITC availed with interest and imposition of penalty shall be initiated as per the law.


Dear Taxpayer,

(1.) As you are aware, Rule 36(4) of the CGST Rules, 2017 notified w.e.f. 09.10.2019, restricts availment of credit to 120% of the eligible credit based on invoices/debit notes uploaded by the suppliers in their GSTR-1. From 1st Jan, 2020, the eligibility has got reduced to 110% of such eligible credit.

(2.) Records indicate that in your GSTR-3B return for Dec, 2019, you have availed credit of Rs. ____ more than the credit admissible under Rule 36(4) of the tax reflected in your GSTR-2A for the said period.

(3.) You are advised to reverse the amount of credit availed in excess. In case such credit has been utilized for paying tax, the same may be deposited through Form GST DRC-03 with applicable interest.

(4.) In case the opportunity for voluntary compliance as suggested is not availed, appropriate action for recovery of excess ITC availed with interest and imposition of penalty shall be initiated as per the law.

>> In our opinion, interest will not be leviable in this case.