THE NEW YEAR HAS COME WITH TWO IMPORTANT CHANGES IN GST ACT

Happy new year to all, have a great year ahead.

In this article, we are going to discuss about the amendment in Rule 36(4) and the insertion of Rule 86A w.e.f. 01.01.2020

Amendment in Rule 36(4) of CGST Rules, 2017 :

Rule 36(4) was first introduced by Notification No. 49/2019 – Central Tax, Dated 09.10.2019, which provides the following :

“(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 percent 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.”

But by issuing Notification No. 75/2019 – Central Tax, Dated 26.12.2019, the said limit (i.e. 20 percent) has been reduced to 10 percent w.e.f. 01.01.2020. The words of notification are as under :

In the Central Goods and Services Tax Rules, 2017 (hereinafter referred to as the said rules), with effect from the 1st January, 2020, in rule 36, in sub-rule (4), for the figures and words “20 percent.”, the figures and words “10 percent.” shall be substituted.

Insertion of Rule 86A in CGST Rules, 2017 :

CBIC has inserted Rule 86A by Notification No. 75/2019 – Central Tax, Dated 26.12.2019, which provides the following :

(1) The Commissioner or an officer authorized by him in this behalf, not below the rank of an Assistant Commissioner, having reasons to believe that credit of input tax available in the electronic credit ledger has been fraudulently availed or is ineligible in as much as –

(a) the credit of input tax has been availed on the strength of tax invoices or debit notes or any other document prescribed under rule 36 –

(i.) issued by a registered person who has been found non-existent or not to be conducting any business from any place for which registration has been obtained ; OR

(ii.) without receipt of goods or services or both ; OR

(b) the credit of input tax has been availed on the strength of tax invoices or debit notes or any other document prescribed under rule 36 in respect of any supply, the tax charged in respect of which has not been paid to the Government ; OR

(c) the registered person availing the credit of input tax has been found non-existent or not to be conducting any business from any place for which registration has been obtained ; OR

(d) the registered person availing any credit of input tax is not in possession of a tax invoice or debit note or any other document prescribed under rule 36,

may, for reasons to be recorded in writing, not allow debit of an amount equivalent to such credit in electronic credit ledger for discharge of any liability under section 49 or for claim of any refund of any unutilised amount.

(2.) The Commissioner, or the officer authorized by him under sub-rule (1) may, upon being satisfied that conditions for disallowing debit of electronic credit ledger as above, no longer exist, allow such debit.

(3.) Such restriction shall cease to have effect after the expiry of a period of one year from the date of imposing such restriction.”.