SOP on Booking ITC under GST in case of 20% cap [Journal Entries]

SOP on Booking ITC under GST in case of 20% cap [Journal Entries] • Rule 36(4) inserted in the CGST Rules, 2017 • 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 in their GSTR-1 under section 37(1), 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 section 37(1). How to Book ITC under GST in case of 20% cap in Tally

• Create a seperate ledger of CGST, SGST & IGST ITC Account-This Account should be different from Current CGST, SGST & IGST ITC Account. You Can name it Un-Reconcilled CGST, SGST & IGST ITC Account.
• Now Make Monthly Reconcilliation of GSTR-2A and Purchase Ledger. There would be Two Scenarios:

You May Also Refer : Rule 36(4) ITC Restriction : 12 FAQ's

• • Invoices Present in GSTR-2A but not Purchase Register
    • If it is due to compliance of section 16 or 17 or invoices not related to the taxpayer then it is okay.
    • If some of the invoices are missed by Accountant, then please Add them.
  • Invoices Present in Purchase Register but not GSTR-2A
    • This would be Dealt as per Rule 36(4) of CGST Rules.
• ITC Relelated to Invoices Present in Purchase Register but not GSTR-2A should be transferred to Un-Reconcilled CGST, SGST & IGST ITC Account
• Now Calculate 20% of ITC Present in GSTR-2A. This should be transferred to Normal CGST, SGST & IGST ITC Accounts.
• This will Give the Figures of Eligible ITC which can be used for paying GST Liability.

You May Also Refer : Calculation of Input tax credit as per new GST Rule 36(4) I am Further Explaining this SOP with an Example and Tally Entries: Suppose Following Results came after making monthly reconcilliation

ITC as Per Books
CGST	SGST	IGST
25	25	50
ITC as per GSTR-2A
CGST	SGST	IGST
20	20	20
Eligible ITC
24	24	24
Ineligible ITC
1	1	26

You May Also Refer : Consequences if 20% ITC RULE 36 (4) is not followed Entry Number 1

CGST Un-Reconcilled A/C	Dr	5
SGST Un-Reconcilled A/C	Dr	5
IGST Un-Reconcilled A/C	Dr	30
To	CGST A/C	5
To	SGST A/C	5
To	IGST A/C	30

Entry Number 2 [caption id="attachment_85055" align="aligncenter" width="833"] SOP on Booking ITC under GST in case of 20% cap [Journal Entries][/caption]

• Now Calculate 20% of ITC Present in GSTR-2A and Transfer to Normal CGST, SGST & IGST ITC Accounts.

CGST A/C	Dr	4
SGST A/C	Dr	4
IGST A/C	Dr	4
To	CGST Un-Reconcilled A/C	4
To	SGST Un-Reconcilled A/C	4
To	IGST Un-Reconcilled A/C	4

You May Also Refer : Changes in GST ITC Availment Conditions

Balance in Legers
CGST A/C	24
SGST A/C	24
IGST A/C	24

  Click Here to Buy CA Final Pendrive Classes at Discounted Rate You May Also Refer : How to Reconcile the ITC for New Rule 36(4) of CGST Rule, 2017 For Regular Updates Join: https://t.me/Studycafe Tags : SOP on Booking ITC under GST in case of 20% cap [Journal Entries], How to Book ITC under GST in case of 20% cap in Tally, Tally Entries of 20% ITC cap