As per Rule 36(4) : No Input Tax Credit shall be availed by a registered person in respect of invoices or debit notes the details of which are required to be furnished under sub-section (1) of section 37 unless,

1. the details of such invoices or debit notes have been furnished by the supplier in the statement of outward supplies in Form GSTR 1 or using the Invoice Furnishing Facility; and
2. the details of input tax credit in respect of such invoices or debit notes have been communicated to the registered person in Form GSTR 2B under sub rule 60.

Analysis:

CGST Rules 36(4) is amended to remove 5% Provisional ITC over and above ITC appearing in GSTR 2B. Now, w.e.f. 1st January, 2022, business can avail ITC only if it is reported by the suppliers in GSTR 1/IFF and it appears in their GSTR 2B.

The revised rule further negatively impacts the GST registered buyers. It leads to taxpayer's working capital getting blocked. Buyers must wait for suppliers to upload invoices in the corresponding GSTR 1. Until then, they must pay the GST Liability in Cash. Taxpayers should rigorously follow up with the vendors or suppliers to upload or report their invoices.

Important Note: The aforesaid restriction of availment of ITC on provisional basis is imposed only in respect of those invoices / debit notes, details of which are required to be furnished by the suppliers under sub-section (1) of section 37 in Form GSTR 1 or using the IFF and which have not been furnished. Therefore, taxpayers may avail full ITC in respect of IGST paid on import, documents issued under RCM, credit received from ISD, etc which are outside the ambit of section 37(1), provided that eligibility conditions for availment of ITC are met in respect of the same. [Circular No. 123/42/2019 - GST, dated 11.11.2019]