CBIC clarifies in respect of refund issues related to Input Tax Credit

The Central Board of Indirect Taxes and Customs(CBIC) has issued a clarification on 10th June 2020 in respect of the issues relating to refund of accumulated Input Tax Credit(ITC) in respect of Invoices whose details are not reflected in the FORM GSTR-2A.

CBIC vide circulars no.125/44/2019-GST dated 18th November 2019 held that ITC in respect of invoices not reflected in FORM GSTR-2A was admissible and copies of such invoices were required to be uploaded.

However, Notification no.49/2019-CT dated 9th October 2019 inserted a rule 36(4) and restricted the claim of provisional ITC to the extent of 20% of the eligible credit available in FORM GSTR-2A, due to which field officers were apprehensive of the claim of refund of ITC of invoices which were not reflected in FORM GSTR-2A.

For E.g., The said notification stated that if a company has invoices of ITC amounting to Rs.100 and its GSTR-2A reflects the balance of Rs.80 then the company could claim ITC worth Rs.96 (120% of Rs.80.).ITC amounting Rs.16 not reflected in FORM GSTR-2A can be claimed as provisional ITC.

Since the date of notification preceded the date of circular, confusion arose in the minds of assessees as well as officers in respect of the refund of accumulated  ITC with respect to the invoices which were not reflecting in GSTR-2A of the applicant.CBIC after examining the matter has decided that the refund of accumulated ITC shall be restricted to the ITC as per those invoices, the details of which are uploaded by the supplier in FORM GSTR-1 and are reflected in the FORM GSTR-2A of the applicant.

Accordingly, Circulars no.125/44/2019-GST dated 18th November 2019 stands modified to that extent.In this context, it is noteworthy that before the issuance of Circular no.135/05/2020-GST dated 31st March 2020, refunds were being granted even in respect of credit availed on the strength of missing invoices(not reflected in Form GSTR-2A).

However, vide Circular No.135/05/2020 – GST dated the 31st March 2020, the refund-related to these missing invoices has been restricted. Now, the refund of accumulated ITC shall be restricted to the ITC available on those invoices, the details of which are uploaded by the supplier in FORM GSTR-1 and are reflected in the FORM GSTR-2A of the applicant.

CBIC has clarified that the aforesaid circular would not in any way impact the refund of ITC availed on invoices/documents relating to imports, ISD invoices and the inward supplies liable to Reverse Charge (RCM supplies) etc. and the treatment of refund of such invoices will continue to be same as it was before the issuance of Circular No.135/05/2020-GST dated 31st March 2020.

Source: www.cbic-gst.gov.in

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