GST department has vide Notification No. 39/2021 – Central Tax Dt. 21st December, 2021, introduced the effective date of amendment made in Section 109 of Finance Act, 2021 which is as under:
“In section 16 of the Central Goods and Services Tax Act, in sub-section (2), after clause (a), the following clause shall be inserted, namely:––
“(aa) the details of the invoice or debit note referred to in clause (a) has been furnished by the supplier in the statement of outward supplies and such details have been communicated to the recipient of such invoice or debit note in the manner specified under section 37;”
The above amendment made by Finance Act, 2021 shall be made effective from 01.01.2022.
According to above amendment one more condition has been added to section 16 of CGST act, which deals with Input tax credit whereby now only credit of those invoices shall be available which has been mentioned by supplier in its details of outward supplies in the manner mentioned in section 37 and section 37 deals with Filing of GST return i.e. GSTR 1.
However, now because of the amendment mentioned above one more condition has been added to taking credit which is that to take credit, the details of such invoice should be mentioned by supplier in his GST return of outward supplies i.e. GSTR 1 and hence now one can only take credit of invoices which are mentioned in GSTR 1 by supplier and not more than that even when recipient is in possession of goods and invoices.
Thus, this could again create chaos and issues for individual who are honestly filing return and paying tax because of the people who are not filing correct GST returns and also in case where the supplier is filing quarterly return and recipient is filing monthly returns and there have been various cases in past law where courts have said that the law cannot harm an innocent by not allowing credit because of the fault of the person who is not filing return.
Let’s see how this works out as earlier the limit was 20%, which was then reduced to 10%, then it was again reduced to 5% of eligible ITC and now no additional credit will be allowed over and above the credit available in GSTR 2A.
To read notification CLICK HERE.
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