Recently Section 16(2)(aa) on Input Tax Credit has been added by Finance Bill. And the implication of this insertion is that it has empowered already existing Rule 36(4). The reason for inserting 16(2)(aa) is being that Rule 36(4) was weak and so, has been challenged before various Authorities & High Courts many times. Consequently, there was a necessity to insert a new rule that can empower the existing Rule 36(4)
- Impact/Effect of Section 16(2)(aa) on Input Tax Credit?
- What is Provision as per new section 16(2) (aa)
According to this section a Registered Person can avail the facility of Input Tax Credit only when details mentioned by the supplier in the statement of outward supplies. And the Aforesaid details have been communicated to the Registered Person in the way specified U/S 37
What was Section 37?
As per this section, every registered person, other than an Input Service Distributor, a non-resident taxable person, and a person who has been paying tax as per the provisions of section 10 or section 51 or section 52 shall mention, electronically, in such form and manner as may be mentioned, the details of outward supplies of goods or services or both that are being effected during a tax period on or before the tenth day of the month succeeding the aforesaid tax period and the above-mentioned details shall be transmitted to the recipient of the aforesaid said supplies within the time and in such way as may be prescribed:(Rule 59)
Before this Section 16(2)(aa), Rule 36(4) has been challenged before various Authorities & High Courts.
- Now Input Tax Credit can only be availed on the basis of GSTR 2(A) because Sec 16(2)(aa) clearly says that ITC will be available only when details are furnished by a supplier in Outward supplies
and - The details have been described to the recipient of such invoice or debit note in the way specified under section 37 & As per Section 37 Rule 59 & Rule, 60 Coming to Outward supplies detail, it shall be made available in GSTR 2(A).
But to be on the safer side, we should take Input Tax Credit on the basis of GSTR 2(B).
