New GST rule to help MSMEs

New Delhi, Nov 23 (KNN) The new Goods and Services (GST) bill will provide some relief to Micro Small and Medium Enterprises (MSMEs) as under the new rule Input Tax Credit (ITC) on invoices which are not uploaded by suppliers in their GSTR-1 (which does not reflect GSTR-2A of recipient), can be availed to the extent of 20% of ITC which is reflecting in GSTR-2A of the recipient in respect of other invoices.

If a taxpayers claims ITC of Rs 10 lakh but can only show uploaded invoices worth, say, Rs 5 lakh, the firm can claim a maximum credit of Rs 6 lakh (Rs 5 lakh for which invoices uploaded plus 20% of `5 lakh for missing invoices).

Earlier the smaller businesses with annual turnover of less than Rs 5 crore are hit by the recent change in Goods and Services Tax (GST) rule, which restricts the amount of input tax credit (ITC) a business can claim.

As per the rule that was amended last month said that ITC claims can only be fully availed if all the relevant invoices are uploaded by the suppliers in its GSTR-1 (the returns where all the outwards sales are detailed).

Since, the rule was twisted to curb ITC frauds, it’s silent on MSME, which are required to file GSTR-1 only quarterly. This means that firms that procure from these units will only see the supply invoices once in three months and hence won’t be able to claim credit in the next tax payment cycle for the supply.

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