13 Nov 2019Posted By: Mudit Handa

Businesses can now take Maximum 120% GST ITC of the amount in GSTR-2A

The GST regime has made businesses altogether hassle-free and more compliant than ever before. It has helped to enhance the ease of doing business by making the compliances less rigid much more tax-friendly. The GST council has devised a number of measures to enhance the convenience of the taxpayer having GST registration as regards the GST tax compliance, i.e. GST return filing and availing of Input Tax Credit. 

Recently, numerous cases have been traced by the government as regards the excessive Input Tax Credit claimed by the taxpayers. Among these, many of the ITC claims have been found to be falsely made.

Hence, the Central Board of Indirect taxes and Customs (CBIC) has notified that from now onwards, while filing GSTR 3B for every month, a dealer having GST registration can avail a maximum ITC up to the Input Tax Credit available in GSTR-2A + 20%, irrespective of his total ITC available in GSTR-1.
Besides, the dealer can’t claim the Input tax credit unless the vendor has filed his GSTR-1.

Read the 


1. How a Dealer can avail GST ITC from now onwards?

As per the CBIC Notification, regardless of how much ITC is available in GSTR-1, the dealer will now be able to claim maximum Input Tax Credit as shown in his purchases return GSTR-2A + 20% of that amount.

Let us understand this with the help of an illustration:

GST ITC in GSTR-2A (in ) GST ITC in GSTR-1 (in )
50 100
  • Suppose Dealer A has total GST Input Tax Credit = ₹100/- in his GSTR-1.
  • But GST ITC available currently in his GSTR-2A₹50/-


  • A will be able to avail ITC = ₹50/- plus ₹10/- (20%) i.e. ₹60/-, despite his total GST ITC available in GSTR-1 is ₹100/-.
  • A will be able to claim the remaining ITC only if his vendor has filed his GSTR-1, which will then be reflected in his GSTR-2A.

Learn how to Check GST ITC in GSTR-2A.

2. Why the restriction on claiming GST ITC has been imposed?

Recently, numerous cases have been detected by the GST authority, where excessive Input Tax Credit of GST claimed by the taxpayers. These also include many fake claims of GST Input Tax Credit. With a view to curbing the malpractice of the false GST ITC claims, the GST department has now imposed the restriction on claiming GST ITC, as discussed above.

3. When will restrictions on claiming GST ITC be applicable?

The above-discussed restriction on claiming GST ITC be effective only on invoices or debit notes on which ITC is to be availed after 9th October 2019.

4. How will this impact the business cash flow leverage?

The above-discussed restriction on claiming GST ITC will put an adverse impact on business cash flow, especially if the vendors are filing quarterly GSTR-1. Let's understand this with the help of an illustration:

Dealer A ITC  (in ₹)

Vendor B ITC (in ₹)


 Aug 2019:     100

 Sep 2019:     100

 Oct  2019:     100

 Nov 2019:     100



 Jul-Sep 2019:     300

 Total ITC:                        400

 Total ITC:                                 300

Suppose a Dealer A has total GST Input Tax Credit = ₹400/- in his GSTR-2A of the past 4 months.

  • His monthly GSTR-2A for October & November 2019 is showing GST ITC = ₹100/- each, for which his Vendor B has not filed GSTR-1 as yet.
  • Hence, Dealer A can claim only ITC =  ₹200 + 40(20% of 200)= 240/-
  • For the remaining ITC, he will have to wait till his vendor B files the GSTR-1 of the next quarter.
  • This will impact his cash flows very much.  

The CBIC circular does not address the problem raised in this practical scenario.


In case you require any sort of assistance regarding the GST registration or GST return filingfeel free to contact us at 8881-069-069.

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