New Time Limit to Avail Input Tax credit Under GST, Know the new date

The introduction of the Goods and Services Tax (GST) in India marked a significant transformation in the country’s taxation system. Among the various provisions, Section 16(4) of the Central Goods and Services Tax (CGST) Act has been a focal point of numerous disputes. This section delineates the time limit for availing Input Tax Credit (ITC). The 53rd GST Council meeting brought about crucial changes by extending this timeline, offering much-needed relief to businesses.

Recent Amendment in 53rd GST Council Meeting

The 53rd GST Council meeting extended the time limit for availing ITC for the financial years 2017-18, 2018-19, and 2019-20 to November 30, 2021. This extension provides relief to businesses that faced challenges in complying with the original deadlines.

Let’s Understand the Section 16(4) as per law :

Section 16 (4): A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the 30th November following the end of financial year to which such invoice or debit note pertains or furnishing of the relevant annual return, whichever is earlier.

Substituted (w.e.f. 1st October, 2022 vide Notification No. 18/2022 – CT dated 28.09.2022.) by s. 100 of The Finance Act 2022 (No. 6 of 2022) for ”due date of furnishing of the return under section 39 for the month of September”.

Extended time line for FY 2017-18: [Provided that the registered person shall be entitled to take input tax credit after the due date of furnishing of the return under section 39 for the month of September, 2018 till the due date of furnishing of the return under the said section for the month of March, 2019 in respect of any invoice or invoice relating to such debit note for supply of goods or services or both made during the financial year 2017-18, the details of which have been uploaded by the supplier under sub-section (1) of section 37 till the due date for furnishing the details under sub-section (1) of said section for the month of March, 2019.]

Below is summarised year wise time limit to avail Input Tax Credit u/s 16(4) with Extended Time Lines

Time limit to avail ITC in case of GSTR-3B Filed after Revocation of Cancellation

The GST Council has recommended allowing a conditional relaxation in the time limit to claim ITC under Section 16(4) in cases where returns for the period from the date of cancellation of registration till the date of revocation of cancellation are filed by the registered person within 30 days of the order of revocation.

Retrospective Application

This provision is also applicable retrospectively from 1st July 2017.

Example: 

(1) GST registration of Ram & co. was cancelled by the GST Department on 1st July 2024. 

(2) Revocation order for this cancellation was received on 10th December 2024. 

(3) According to Section 16(4), the last date to claim Input Tax Credit (ITC) for the Financial Year 2023-24 is 30th November 2024. 

(4) However, as per this recommendation effective from 1st July 2017, the business can now claim ITC up to 9th January 2025, provided the returns for that period are filed within 30 days from the order of revocation, i.e., by 9th January 2025.

Clarification on Time Limit to Avail ITC on GST Paid under RCM

The GST Council clarified that for GST payable under the Reverse Charge Mechanism (RCM) by the recipient on supplies received from unregistered suppliers, the relevant financial year for the time limit to avail ITC as per Section 16(4) will be the financial year in which the self-invoice is generated by the recipient.

Example: 

Super Ltd. Made a Payment to GTA (unregistered) in 2019 (Covered under RCM) However, GST payable under RCM was not paid on this transaction. 

After this came into knowledge, GST was paid in November 2021 (along with interest due to time period as per time of supply provisions) , and Super Ltd generated a self-invoice during the Financial Year 2021-22. Now, Super Ltd. can claim ITC till 30.11.2022 since the self-invoice was issued in FY 2021-22.

The amendments introduced by the 53rd GST Council meeting and the subsequent judicial rulings signify a pivotal shift in the interpretation and implementation of Section 16(4) of the CGST Act. By extending the deadlines for availing ITC, addressing procedural ambiguities, and offering conditional relaxations, the government and judiciary have collectively aimed to mitigate the initial hurdles faced by businesses under the GST regime. These changes not only provide relief to taxpayers but also promote a more transparent and equitable tax system. As businesses adapt to these modifications, the emphasis on compliance and adherence to updated regulations will be crucial in leveraging the benefits of the GST framework effectively.

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