Accumulation of Input Tax Credit takes place when the tax paid on inputs is more than the output tax liability. Such accumulation will have to be carried over to the next financial year till such time as it can be utilised by the registered person for payment of output tax liability.

However, the GST Law permits refund of unutilised ITC in two scenarios, namely if such credit accumulation is on account of zero rated supplies or on account of inverted duty structure, subject to certain exceptions.

Time Limit for Refund of Unutilised Input Tax Credit

Section 54(1) of CGST Act 2017 provides the time limit of two years from the relevant date within which refund can be filed by registered taxable person

Definition of relevant date in case of refund of unutilsed input tax Credit (Clause (e) to explanation (2) to section 54(14) of CGST Act 2017 ) has been amended by section 23 of CGST (Amendment) Act 2018 in the following manner which will be effective from 1 Feb 2019: –

Two year from the due date for furnishing of return under section 39 for the period in which such claim for refund arises (prior to amendment ,relevant date was Two year from the end of Financial Year in which claim for such accumulated credit arises)

For example , claim for accumulated input tax credit arises in the month of Jan 2020 . A person can file his refund claim till 20th Feb 2022 as the relevant due date for the purpose is 20th Feb 2020 ( due date for furnishing of GSTR 3B is for the month of Jan 2020 )

Prior to amendment, refund of accumulated Input Tax Credit for Financial year 2019-20 can be filed up to 31 March 2022. (End of financial year in which claim for accumulated credit arises)

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  1. madhusudan says:

    hello ,
    what is the meaning of section 39 return . is it is 3b or r-1. and whether i can apply refund for f y 2017-18 upto 31.3.2020

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January 2021