New 20% Input Tax Credit (ITC) Rule under GST | Latest & Big Clarification by CBIC The government introduced a New input tax credit 20% rule which is implemented from 9 October 2019. As per the amendment published by CBIC, Taxpayers can now avail only 20% of Provisional ITC reflected in GSTR 2A of its vendor. the notification issued by the CBIC caused a lot of confusion over the method of calculating this 20% amount.
However, the circular no. 123/2019 issued by the Central Board of Indirect Taxes (CBIC) clarified that 20% cap on the eligible Input Tax Credit will not be calculated supplier-wise and GST payers can avail the input tax credit on a consolidated basis.
In this video, we explained how to calculate 20% amount over and above the eligible amount of ITC and where the new rule will not be applicable.
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