Circular 123/42/2019 (More complications in Rule 36(4) -20%+ 2A)

Originally posted by : Pankaj Rawat
	Correct ,.... this will not going to implemented for long.

I Agree. Also, the rule fails to take into account suppliers who are on Quarterly filing of GSTR-1. Which means, as per current rule, you may have to wait for 1 to 3 months to be able to add their invoices to Availabie ITC calculation (that too if they file their quarterly return by the due date).

There are many businesses wherein most of the purchase is from small traders under quarterly filing.

The two big drawbacks with this new rule are :-

1) It affects your cash flow because you may end up paying cash instead of utilising the ITC amount restricted by the 20% rule. Which is till the time these invoices are filed by suppliers. As a result, there might always be some portion of your cash blocked against unutilised ITC.

2) It complicates the process of tracking ITC and it's annual comparison between Books and GST returns, which further adds to the complication in filing GST Annual Return & Reconciliation.

BTW, the point no. 2 of the notification No. 49/2019 of CGST Act which inserts rule 36(4) of 20% restriction, states that the said rules shall come into force on the date of their publication in the Official Gazette.

Till now, the above notification is Not published in the Gazette. So, can we infer that the said rule is Not yet applicable??

NO..... ITS BEING EFFECTIVE FROM 9.10.19