Navigating the intricate landscape of Goods and Services Tax (GST) involves understanding critical elements, and one such crucial aspect is the timely claiming of Input Tax Credit (ITC). Section 16(4) of the Central Goods and Services Tax Act, 2017, delineates the timeframe within which businesses must assert their ITC. This article delves into the specifics of this provision, elucidates the consequences of missing the stipulated period, explores the relaxation granted for the inaugural year of GST implementation, and sheds light on re-availing credits. A comprehensive grasp of these intricacies is paramount for businesses seeking GST compliance and optimal financial management.
Page Contents
- What is the time limit for claiming ITC under GST?
- What is last date of filing Annual GST Return?
- What happens if I don’t claim ITC within the prescribed time limit?
- Whether ITC for invoices issued in previous financial years can be claimed?
- Relaxation/extended period to avail ITC for FY 2017-18.
- Re-availing the credit after payment to supplier.
What is the time limit for claiming ITC under GST?
According to Section 16(4) of the Central Goods and Services Tax Act, 2017 (“CGST Act”), a registered person must claim Input Tax Credit (ITC) within the earlier of the following:
- 30th November following the end of the financial year to which the invoice or debit note pertains, or
- The date of filing the annual return.
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 #[Thirtieth day of November] following the end of the financial year to which such invoice or ##[XXX] debit note pertains or furnishing of the relevant annual return, whichever is earlier;”
#substituted for “due date of furnishing of the return under section 39 for the month of September” by Finance Act, 2022 (6 of 2022), w.e.f. 1-10-2022 vide SO 4569(E), dt. 28.09.2022.
##Words “invoice relating to such” omitted by the Finance Act, 2020 (12 of 2020), dt. 27.03.2020. w.e.f. 1-1-2021 vide SO 4643(E), dt. 22-12-2020.
What is last date of filing Annual GST Return?
Every registered person, excluding specific categories, is required to file the annual return within the time and manner prescribed. The last date for filing the Annual Return for FY 2022-23 was 31st December, 2023, as per Rule 80 of the CGST Rules, 2017.
As per Section 44 of CGST Act, every registered person is required to file Annual Return within such time and in such manner as may be prescribed except the following:
(a) An Input Service Distributor;
(b) A person paying tax under Section 51 (i.e. TDS deductor);
(c) A person paying tax under Section 52 (i.e. TCS collector);
(d) A Casual Taxable Person; and
(e) A Non Residential Taxable Person
As per Rule 80 of the CGST Rules, 2017, every registered person liable to file Annual Return for every financial year is required to file the same on or before the 31st December of next financial year. Accordingly, the last date of filing Annual Return for FY 2022-23 was 31st December, 2023.
It may be noted that the last date of filing Annual Return for FY 2017- 18 was extended upto 05th-07th February, 2020; for FY 2018-19 upto 31st December, 2020 and for FY 2019-20 upto 31st March, 2021 and for FY 2020-21 upto 28th February, 2022.
Section 44. Annual return.
#(1) Every registered person, other than an Input Service Distributor, a person paying tax under section 51 or section 52, a causal taxable person and a non-resident taxable person, shall furnish an annual return which may include a self-certified reconciliation statement, reconciling the value of supplies declared in the return furnished for the financial year, with the audited annual financial statement for every financial year electronically, within such time and in such manner as may be prescribed.”
Provided that the Commissioner may, on the recommendations of the Council, by notification, exempt any class of registered persons from filing annual return under this section.
Provided further that nothing contained in this section shall apply to any department of the Central Government or a State Government or a local authority, whose books of account are subject to audit by the Comptroller and Auditor-General of India or an auditor appointed for auditing the accounts of local authorities under any law for the time being in force.”
# Fully substituted by Finance Act, 2021 notified vide Notification No. 29/2021 -Central Tax dated 30th July, 2021 w.e.f. 01.08.2021.
## Further, being power given under the first proviso, the Government has exempted vide Notification No. 10/2022-Central Tax, dated 5th July, 2022 the registered person whose aggregate turnover in the financial year 2021-22 is upto two crore rupees, from filing annual return for the said financial year.
Rule 80. Annual return.
###“(1) Every registered person, other than those referred to in the second proviso to section 44, an Input Service Distributor, a person paying tax under section 51 or section 52, a casual taxable person and a non-resident taxable person, shall furnish an annual return for every financial year as specified under section 44 electronically in FORM GSTR-9 on or before the thirty-first day of December following the end of such financial year through the common portal either directly or through a Facilitation Centre notified by the Commissioner.
### Fully substituted by Notification No. 30/2021 -Central Tax dated 30th July, 2021 w.e.f. 01.08.2021.
What happens if I don’t claim ITC within the prescribed time limit?
If the registered person fails to claim ITC within the prescribed time limit, they would not be able to claim such credit in future.
Whether ITC for invoices issued in previous financial years can be claimed?
No, ITC for invoices issued in previous financial years cannot be claimed. ITC can be claimed only for invoices issued during the current financial year, and must be claimed within the time limit specified in Section 16(4) of the CGST Act.
Relaxation/extended period to avail ITC for FY 2017-18.
Please note that the financial year 2017-18 was the first year of the implementation of the Goods and Services Tax in India and the taxpayers were still in the process of familiarising themselves with the new taxation system and due to lack of said familiarity-
(i) the registered persons eligible to avail input tax credit could not claim the same in terms of provisions of section 16 because of missing invoices or debit notes referred to sub-section (4) within the stipulated time;
(ii) the registered persons could not rectify the error or omission in terms of provisions of sub-section (3) of section 37 within the stipulated time,
As a result, certain difficulties have arisen in giving effects to the provisions of subsection (4) of section 16 and sub-section (3) of section 37. In view of this, the Removal of Difficulty Order No. 2 /2018-Central Tax dated 31/12/2018 was issued by CBIC by which a proviso to Section 16(4) has been inserted.
“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.”
As per the above proviso, it is clear that matching provisions of ITC with GSTR-2A is applicable only when ITC of FY 2017-18 has been taken in extended time period i.e. between October 2018 to March 2019.
Re-availing the credit after payment to supplier.
It is to be noted that the credit of ITC reversed under Rule 37 (1) of the CGST Rules, 2017 (i.e. reversal of ITC in case of non-payment of consideration within 180 days) can be taken after payment to the supplier of goods or services or both. As per Rule 37(4) of the CGST Rules, 2017, the time limit specified in section 16(4) of the CGST Act will not apply to such re-credit. However, the validity of such Rule 37(4) is required to be tested because Section 16(4) of the CGST Act provides maximum time period to avail credit and rules cannot override main provisions i.e. sections.
Conclusion: Understanding the time limits for claiming ITC under Section 16(4) is crucial for GST compliance. Filing the annual return on time and adhering to the prescribed periods for ITC claims are essential to avoid repercussions. The relaxation for FY 2017-18 provides relief for eligible claims during the extended period.
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Disclaimer: Nothing contained in this document is to be construed as a legal opinion or view of either of the author whatsoever and the content is to be used strictly for informational and educational purposes. While due care has been taken in preparing this article, certain mistakes and omissions may creep in. the author does not accept any liability for any loss or damage of any kind arising out of any inaccurate or incomplete information in this document nor for any actions taken in reliance thereon.
Author Bio
Under the CGST Act, Every registered person is entitled to take the ITC is for Claim is the intention of the legislature, means S.41 of the Act,rw rule 61(2) prescribed in that his return u/s 39 the statement shall be filled on auto–generated basis based on the Purchase Annexures furnished on the GST Common portal u/s.38 of the Act. Such purchase annexure (details of inward supply) is called form GSTR-2. Form GSTR-3 (Sec.39) return is drafted with suitable tables in the regards to hold particulars of such purchase total amount shall be autogenerated and furnished u/s 38 of the Act. Please refere marginal headings to S.41 for the period from 01.07.2017 to 30.09.2022, the concept of ITC claim under the Tamil Nadu Value Added Tax Act 2006 and the CGST Act 2017 are one and the same except slight difference in procedural,