The Circular No. 237/31/2024-GST, dated October 15, 2024, clarifies the provisions related to the implementation of sub-sections (5) and (6) of Section 16 of the CGST Act, 2017. These sub-sections were inserted retrospectively through Section 118 of the Finance (No. 2) Act, 2024, and allow for extended time limits to claim input tax credit (ITC) under certain conditions.
Key points:
Sub-section (4), (5), and (6) of Section 16:
- Sub-section (4) defines the time limit for availing ITC, stating that it cannot be claimed after the 30th of November following the end of the financial year or after furnishing the annual return.
- Sub-section (5) allows registered persons to claim ITC for financial years 2017-18 to 2020-21 up to November 30, 2021, even if the general time limits under sub-section (4) have passed.
- Sub-section (6) allows ITC to be claimed in cases where a person’s GST registration was canceled and later reinstated, provided that ITC was not previously restricted under sub-section (4).
Special Procedure for Rectification: A special procedure has been notified under Notification No. 22/2024-Central Tax, dated October 8, 2024, for taxpayers to rectify orders under Sections 73, 74, 107, or 108 of the CGST Act. This applies where the original demand was due to wrong availment of ITC under sub-section (4), but the credit is now available under the newly inserted sub-sections (5) or (6).
Click here to Read full Circular
Action Points for Authorities and Taxpayers:
- Authorities are instructed to take into account these retrospective provisions when passing orders or handling cases involving wrong availment of ITC for past periods.
- Taxpayers can apply electronically for rectification if they meet the criteria outlined in the circular. The rectification process is outlined with steps for submitting online applications for different types of orders.
No Refund for Tax Paid: Section 150 of the Finance (No. 2) Act, 2024, specifies that no refund will be granted for tax paid or ITC reversed under the previous provisions, even if the credit is now allowed.
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