Rule 36 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Rule 36(4) is the reason your purchase register and GSTR-2B have to agree before you file GSTR-3B. For invoices that your supplier must report, no credit is allowed unless the supplier has reported them and the credit has come to you in GSTR-2B. There is no percentage cushion any more.
Under Rule 36(4), ITC cannot be availed on invoices or debit notes whose details are required to be furnished under section 37(1) unless (a) the supplier has furnished them in GSTR-1 (as amended in GSTR-1A, if any) or through the invoice furnishing facility, and (b) the ITC on them has been communicated to you in GSTR-2B under Rule 60(7). The same condition is in section 16(2)(aa). The earlier 20, 10 and 5 percent allowances ended on 31 December 2021, and the cushion has been nil from 1 January 2022.
What the rule and the section say
Two provisions work together.
Section 16(2)(aa) says you are not entitled to credit unless the details of the invoice or debit note have been furnished by the supplier in the statement of outward supplies and communicated to you in the manner specified in section 37. Section 16(2)(ba) adds that the details of ITC communicated to you under section 38 must not have been restricted.
Rule 36(4) then states the operating test. No credit on invoices or debit notes whose details are required to be furnished under section 37(1) unless:
- (a) the supplier has furnished them in GSTR-1 (as amended in GSTR-1A, if any) or using the invoice furnishing facility; and
- (b) the details of the ITC on them have been communicated to you in GSTR-2B under sub-rule (7) of Rule 60.
Note the scope. The rule bites on invoices and debit notes that a supplier must report under section 37(1). The IMS material lists reverse charge records, ICEGATE documents and ISD documents as outside the invoice management system, so those flows are not matched in the same way. For everything else, a regular GSTR-2B and books reconciliation is the working control.
A point on wording. The Background Material sometimes describes the rule as allowing credit only "to the extent" shown in GSTR-2B. The rule text is invoice-based: an invoice either satisfies (a) and (b) or it does not. Where the commentary and the rule text differ, follow the rule text.
How the 2B cushion ended
The rule was inserted by Notification No. 49/2019-CT dated 9 October 2019 and applied to all returns filed after that date. The Background Material lists the additional relief that was given:
| Period | Additional credit allowed beyond matched invoices |
|---|---|
| 9 October 2019 to 31 December 2019 | 20 percent |
| 1 January 2020 to 31 December 2020 | 10 percent |
| 1 January 2021 to 31 December 2021 | 5 percent |
| From 1 January 2022 | Nil |
There were also cumulative relaxations for February to August 2020 (applied in the September 2020 return) and for April to June 2021. The rule as it stands today says that no relaxation is available for further periods. Since 1 January 2022 the test is applied invoice by invoice and credit is limited to what GSTR-2B supports.
A worked example
This is an illustration with round figures. For a month, your purchase register shows eligible credit of Rs. 6,00,000. GSTR-2B shows Rs. 5,20,000.
| Item | Amount (Rs.) | Claim in this month's GSTR-3B? |
|---|---|---|
| Invoices matched in GSTR-2B | 5,20,000 | Yes |
| Invoices the supplier has not reported | 60,000 | No. Wait until they appear in a later GSTR-2B |
| Invoices rejected or held by you in IMS | 20,000 | No, until accepted and GSTR-2B is recomputed |
The Rs. 80,000 is not lost. It waits. What puts it at risk is the clock in section 16(4): the credit must be claimed in a return filed by 30 November after the financial year. A monthly matching routine, such as the one in a GSTR-2B to books reconciliation, tells you which invoices are waiting and with which vendor.
GSTR-2B, IMS and what you control
GSTR-2B is a static statement of ITC for a tax period and does not change after it is generated. GSTR-2A, in contrast, is dynamic. The material describes the IMS workflow on top of this:
- Accept. The invoice flows into GSTR-2B and auto-populates GSTR-3B.
- Reject. It is excluded from GSTR-2B and no credit is claimed.
- Pending. It is held, not counted in the current GSTR-2B, and can be accepted later.
- No action. It is treated as deemed accepted when GSTR-2B is generated.
Draft GSTR-2B is generated on the 14th of each month and you can recompute it after changing IMS actions, until GSTR-3B is filed. The material's FAQs explain how to fix an invoice rejected by mistake: ask the supplier to report the same record again, unchanged, in GSTR-1A or an amendment table, then accept it in IMS. Quarterly filers get GSTR-2BQ on the 14th of the month after the quarter. More on this is in the Invoice Management System and GSTR-2B.
What happens if you claim more than 2B shows
Claiming credit that does not satisfy Rule 36(4) is an over-claim. The mismatch can also trigger a system-generated notice. See Rule 88D and DRC-01C: when credit availed exceeds GSTR-2B. Separately, the material points out that if credit appears in GSTR-2B there is still no assurance that the supplier files GSTR-3B. That is the gap Rule 37A covers. Read Rule 37A reversal when the supplier does not file GSTR-3B.
A monthly routine
- Generate GSTR-2B for the period and download it.
- Match it to the purchase register by GSTIN, invoice number and amount.
- Mark unmatched invoices and chase the supplier to report them.
- Claim only the matched eligible credit in GSTR-3B, less blocked and reversed items.
- Carry unmatched items forward on a list that is reviewed before 30 November each year.
Businesses with heavy purchase volumes can make this easier by pairing it with an ITC reconciliation advisory review of vendors who often report late.
Need help with GSTR-2B matching?
If your books and GSTR-2B rarely agree, most of the work is in finding out why. Our team can set up a monthly match, list the vendors behind the gaps and prepare a claim schedule before each return through our GSTR-2B and books reconciliation service, so that credit is claimed when the law allows it.
Key takeaways
- Rule 36(4) and section 16(2)(aa) need the supplier's GSTR-1 (or 1A or IFF) and a place in your GSTR-2B.
- The 20, 10 and 5 percent allowances are gone. The cushion has been nil since 1 January 2022.
- Test invoice by invoice. Follow the rule text, not a loose "to the extent" summary.
- Unmatched credit waits; the section 16(4) deadline is what can kill it.
- IMS actions change what lands in GSTR-2B; recompute before filing GSTR-3B.
- Claiming more than GSTR-2B supports risks an over-claim and a notice.
Read next
- Rule 36: which documents actually support a credit claim
- ITC matching and GSTR-2B: how auto-populated credit works
- ITC time limit: section 16(4) and 30 November
- Rule 37A: ITC reversal when the supplier does not file GSTR-3B
Disclaimer: Positions stated as on 30 September 2026, based on the CGST and IGST Acts and Rules as amended, the Finance Act 2026, and the ICAI Background Material on GST (14th Edition, July 2026). Verify current notifications before acting.