30 Dec 2019Posted By: Mudit Handa

Businesses are allowed to take Maximum 110% GST Input Tax Credit

The GST council has brought numerous measures for enhancing an regulating the compliance of the taxpayers having GST registration with regard to GST return filing and availing of the Input Tax Credit. 

Recently, in the wake of numerous cases of the availing excessive GST Input Tax Credit claimed by some taxpayers, the GST department had placed a restriction on availing ITC. 

It was notified that while filing GSTR 3B for every month, a dealer having GST registration will be able to avail a maximum of ITC up to the amount available in GSTR-2A + 20%, regardless of his total ITC available in GSTR-1. Further, the dealer can’t claim the GST ITC unless his vendor has filed his GSTR-1.

In this regard, now the Central Board of Indirect taxes and Customs (CBIC) has notified that from now onwards, a dealer will be able to avail a maximum of ITC up to the amount available in GSTR-2A + 10%,

This step has been taken to curb the inappropriate ITC claims that have been found to be falsely made by the taxpayers having GST registration.

Read the 

1. How much GST ITC can be availed by the taxpayer?

As per the latest CBIC Notification, irrespective of how much ITC is there in his GSTR-1, the dealer will now be able to claim maximum Input Tax Credit as entered in his purchases return GSTR-2A + 10% of that amount.

We can understand this well with the help of the illustration given below:

GST ITC of GSTR-2A (in â‚¹) GST ITC available in GSTR-1 (in â‚¹)
50 100
  • Suppose Dealer A is having total GST ITC = â‚¹100/- in his GSTR-1 return.
  • However, the GST ITC available in his GSTR-2A = â‚¹50/-


  • A can avail ITC = â‚¹50/- plus â‚¹5/- (10%) i.e. â‚¹55/-, even though his total GST ITC in GSTR-1 was â‚¹100/-.
  • Besides, A will be able to get the remaining ITC only if his vendor has filed his GSTR-1. This will then be reflected in his GSTR-2A.

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

2. When will the ITC claim not be allowed to the taxpayer?

As per the CBIC Notification, the Input Tax Credit shall not be allowed to a taxpayer having GST registration, if the ITC claim is found to be fake or fraudulent by the GST Commissioner or an officer authorized by him.

3. When will an ITC claim be considered as fake or invalid?

The CBIC Circular has cleared about various types of cases where the GST ITC claim shall be considered invalid by the GST officer. Those cases are given below:

  • If ITC claim is issued by a taxpayer having GST registration, but who has been found non-existent or he is not conducting any business from that place from which he has obtained GST registration; OR
  • If the dealer has not got the receipt of his goods or services or both; OR 
  • The output of GST with respect to ITC is availed by the registered person, for which has not yet paid GST to the Government; OR
  • The registered person who has availed ITC is found to be non-existent or not carrying out business from the place for which he has obtained GST registration.
  • The taxpayer has availed the ITC but he is not having a GST tax invoice or the debit note. 

In all the above cases, the GST ITC claim shall be considered inappropriate and the debit of an amount equivalent shall not be allowed to the taxpayer.

4. When will this rule become effective?

The aforesaid rule shall be brought into effect from the 1st of January 2020.

The Taxpayers can, however, instantly create the GST Tax Invoice and the debit note through the InstaBill Software.


If you need any further assistance with respect to the GST return filing procedure, please feel free to contact our business advisor at 8881-069-069.

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