Recently, notification no 49/2019-central tax on 9th October, 2019 has come restricting the input tax credit to 120% of the eligible input tax credit on the basis of invoices actually uploaded by supplier under section 37(1). We have analyzed the notification in detail and below is the mechanism how to arrive at this 120% and what are the complications in this notification.

New Rule

Rule 39(4) “Input tax credit to be availed by a registered person in respect of invoices or debit notes, the details of which have not been uploaded by the suppliers under sub-section (1) of section 37, shall not exceed 20 per cent. of the eligible credit available in respect of invoices or debit notes the details of which have been uploaded by the suppliers under sub-section (1) of section 37.”

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