Time to Cheers: ITC restrictions of 10% under Section 36(4) temporarily suspended: CA Jethalal Rukhiyana



The Government is acting very proactively on every front. The Government is announcing various relief measures one after another. Be it taxation front, economic front, individual front, Government is leaving no stone unturned for the betterment of the country.

One such important measure that has been taken by the Government is the relief from section 36(4) which was placing enormous burden on the business houses.

The provision of section 36(4) can be read at


  1. https://thetaxtalk.com/2019/12/09/new-rule-364-to-further-complicate-gst-part-ii/

Government has put the proposal of section 36(4) on hold for a period of 6 months for availing GST credit for February to August. This move would certainly help the dealer to get some relief and would relieve from the compliance burden.  The condition to avail credit in excess of 10% of the invoices uploaded for February-August has been waived as per the Government notification issued recently. It may be noted that section 36(4) is not abolished fully but it will have to be cumulatively adjusted in GSTR-3B returns for September.

Taxpayers may note that it was since January input tax credit claims had been restricted to the extent of 10% of the eligible credit if corresponding invoices were not uploaded by the taxpayer’s suppliers.  The originally restrictions was of 20% which was then relaxed to 10% of the restrictions.

The restrictions of 10% was place just with an aim to curb fake ITC billing racket apart from increasing GST revenues by due compliance from the supplier. The onus was shifted from the seller to the buyer to ensure the return filing by the supplier

With this relief, taxpayers will thus be able to claim input tax credit on purchases from those suppliers who has not filed the GST returns or failed to upload the invoice details in their returns.

Apart from this, it will definitely relieve the purchaser from the unwanted compliance burden. Undoubtedly, the cash flow of the buyers will also remain unaffected by this relief.