/** * The main template file * * This is the most generic template file in a WordPress theme * and one of the two required files for a theme (the other being style.css). * It is used to display a page when nothing more specific matches a query. * E.g., it puts together the home page when no home.php file exists. * * @link https://developer.wordpress.org/themes/basics/template-hierarchy/ * * @package WordPress * @subpackage Tally * @since 1.0.0 */ ?>
Background:
The Hon’ble Finance Minister, in Budget 2021-22, proposed changes vide the Finance Bill, 2021, that amends the Central Goods and Services Tax Act, 2017 (“the CGST Act”) to insert a new condition for availment of Input Tax Credit (“ITC”) under the GST. Accordingly, amended Bill was passed in Rajya Sabha, the upper house, and it received presidential assent vide Finance Act, 2021.
Relevant provisions:
The CBIC vide Notification No. 39/2021–Central Tax dated December 21, 2021 notified the below mentioned amendments made vide Section 109 of the Finance Act, 2021 w.e.f. January 01, 2022:
Section 16(2) - Eligibility and conditions for taking input tax credit – Section 109 of the Finance Act, 2021 |
|
Current provisions |
Notified provisions |
------- |
After clause (a), in sub-section (2) of Section 16, the following clause shall be inserted: “(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.” |
Our comments:
New condition to avail Input Tax Credit:
It was been proposed to insert the new clause ‘(aa)’, after clause (a), in Section 16(2) of the CGST Act, that provides an additional condition to claim ITC based on GSTR-2A and newly introduced GSTR-2B, i.e., ITC on invoice or debit note can be availed only when details of such invoice/debit note have been furnished by the supplier in his outward supplies (GSTR-1) and such details have been communicated to the recipient of such invoice or debit note.
Hence, w.e.f. January 01,2022, following conditions need to be satisfied under Section 16(2) of the CGST Act for availing GST ITC on inward supplies of goods or services or both:
No relevance of 5% limit mentioned in Rule 36(4) of the Central Goods and Services Tax Rules, 2017 ("CGST Rules”)
This amendment was proposed to avoid the unnecessary litigation and writ petitions challenging the validity of Rule 36(4) of the CGST Rules that prescribes the similar condition with 5% limit to avail ITC on invoices/debit notes not uploaded by the supplier in GSTR-1 (as amended vide Notification No. 94/2020- Central Tax dated December 22, 2020 w.e.f. January 01, 2021) which will be of no relevance w.e.f. January 01, 2022 as the recipient would not be able to take any ITC if the same is not coming in recipients GSTR-2A and/or 2B.
To know more, kindly see our video:
The Notification can be accessed at: https://www.cbic.gov.in/resources//htdocs-cbec/gst/notfctn-39-central-tax-english-2021.pdf
(Author can be reached at info@a2ztaxcorp.com)
DISCLAIMER: The views expressed are strictly of the author and A2Z Taxcorp LLP. The contents of this article are solely for informational purpose and for the reader’s personal non-commercial use. It does not constitute professional advice or recommendation of firm. Neither the author nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon. Further, no portion of our article or newsletter should be used for any purpose(s) unless authorized in writing and we reserve a legal right for any infringement on usage of our article or newsletter without prior permission.
Managing business finances isn’t just about bookkeeping—it also involves handling payments, tracking cash flow, and ensuring accurate reconciliation. While accounting has become more automated
Read More
The latest release of TallyPrime brings a suite of features that significantly simplify GST and reporting tasks. From creating ledgers with a click to tracking every GST-related activity, these
Read More
Direct Tax India is growing at an accelerated pace and people are undertaking multiple financial transactions. The Income Tax Department has established a robust framework of reporting of taxpayers'
Read More
The Finance (No.2) Bill, 2024 has proposed changes in the CGST Act, IGST Act, UTGST Act and GST (Compensation to States) Act, 2017 through Clauses 110 to 146 of the Bill in CGST Act 2017, through.....
Read More
The Hon’ble Union Minister for Finance and Corporate Affairs, Smt. Nirmala Sitharaman, while presenting the Interim Budget 2024-25 in Parliament today asserted that by unifying the highly fragmented i
Read More