Section 16(4) of CGST Act, 2017 - Time Limit to Avail ITC

Section 16(4) of the CGST Act, 2017 deals with the time limit for availing Input Tax Credit (ITC) under the Goods and Services Tax (GST) regime in India. According to this section, a registered person is eligible to claim ITC only if the following conditions are satisfied:

1. The registered person must possess a tax invoice or a debit note issued by a supplier or any other document as prescribed.

2. The goods or services or both received by the registered person must have been used or intended to be used in the course or furtherance of business.

3. The registered person must have filed the GST returns for the relevant tax period.

In addition to the above conditions, Section 16(4) imposes a time limit on claiming ITC. A registered person is required to claim ITC within the earlier of the following two dates:

1. The due date for filing of the GST return for the month of September following the end of the financial year to which such invoice or invoice relating to such debit note pertains, or

2. The date of filing of the annual return.

For example, if a taxpayer wants to claim ITC for invoices issued during the financial year 2021-22, they need to claim it by the earlier of the following two dates:

1. Due date for filing the GST return for September 2022 (which would typically be in October 2022), or

2. Date of filing the annual return (which would be on or before 31st December 2022).

If the registered person fails to claim ITC within the prescribed time limit, they would not be able to claim such credit in future. However, they can claim the credit in certain exceptional cases where the failure to claim the credit is due to reasons beyond their control, such as delay in receipt of invoice or dispute with the supplier regarding the quality or quantity of goods or services.

The time limit for claiming ITC under GST

In India, the time limit for claiming Input Tax Credit (ITC) under GST (Goods and Services Tax) is prescribed under section 16 of the CGST (Central Goods and Services Tax) Act, 2017. The following are the important provisions related to the time limit for claiming ITC:

1. Time limit for claiming ITC: A registered person can claim ITC for any tax period only before the due date of furnishing the return for the month of September following the end of the financial year to which such invoice pertains or the actual date of filing of annual return, whichever is earlier.

For example, if a taxpayer wants to claim ITC for the financial year 2021-22, then the last date to claim such credit would be September 20, 2022 (i.e., the due date of filing the GSTR-3B return for September 2022) or the date of filing the annual return, whichever is earlier.

2. Reversal of ITC: If a taxpayer fails to pay the supplier within 180 days from the date of the invoice, the ITC claimed earlier has to be reversed along with interest.

3. Availing missed ITC: A taxpayer can claim any missed ITC for a tax period in the return for any subsequent tax period, subject to the conditions and restrictions.

It is important for taxpayers to ensure timely and accurate claiming of ITC under GST to avoid any non-compliance issues or adverse impact on their working capital. It is advisable to consult a tax expert or chartered accountant for a better understanding of the provisions related to claiming of ITC under GST.

Section 16(4) of CGST Act, 2017 - Time Limit to Avail ITC FAQs

Here are some frequently asked questions related to Section 16(4) of the CGST Act, 2017, which deals with the time limit for availing Input Tax Credit (ITC) under the Goods and Services Tax (GST) regime in India:

Q: What is the time limit for claiming ITC under GST?

A: As per Section 16(4) of the CGST Act, a registered person is required to claim ITC within the earlier of the following two dates: (1) the due date for filing of the GST return for the month of September following the end of the financial year to which such invoice or invoice relating to such debit note pertains, or (2) the date of filing of the annual return.

Q: What happens if I don't claim ITC within the prescribed time limit?

A: If the registered person fails to claim ITC within the prescribed time limit, they would not be able to claim such credit in future. However, they can claim the credit in certain exceptional cases where the failure to claim the credit is due to reasons beyond their control, such as delay in receipt of invoice or dispute with the supplier regarding the quality or quantity of goods or services.

Q: Can I claim ITC for invoices issued in previous financial years?

A: No, you cannot claim ITC for invoices issued in previous financial years. 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.