Time Limit To Avail Input Tax Credit

For the purpose of understanding the time limit to avail Input Tax Credit (ITC), we will have to look into 2 section of CGST Act- Section 16(4) & Section 18(2). First of all, we will look into the provisions of section 16(4) of CGST Act, 2017.

According to section 16(4) of the Act, a registered taxable person shall not be entitled to take ITC in respect of any invoice or debit note for supply of goods or services or both: -

• after the due date of furnishing of the return u/s 39 for the month of September following the end of financial year to which such invoice or debit note pertains or
• furnishing of the relevant annual return, whichever is earlier

GST Return for the month of September is to be filed by 20^th/22^nd/24^th October whereas annual return for any financial year is to be filed by 31^st December of the succeeding financial year. Thus, taking an example, we can say that ITC in respect of F.Y. 2020-21 can be availed by 20^th/22^nd/24^th October 2021. But, if the taxable person has filed its annual return before 20^th/22^nd/24^th October 2021, then the ITC in respect of F.Y. 2020-21 can be availed only up to the date of filing such annual return.

Further, as per the provisions of section 18(2) of CGST Act, a registered taxable person is not entitled to take ITC in respect of any supply of goods or services or both after the expiry of 1 year from the date of issuing tax invoice relating to such supply. This sub-section has its validity in cases as mentioned in section 18(1). Such cases shall include a case of new registration or where a person shifts from composition scheme to regular scheme or where an exempt supply become taxable.

Relaxation for financial year 2017-18 for taking ITC

Since, the F.Y. 2017-18 was the first year of GST implementation and the business community as well as tax professionals were facing difficulties in implementation of GST, the Government relaxed the time limit for availing ITC as prescribed u/s 16(4).

For this purpose, a proviso was inserted to section 16(4) vide Removal of Difficulties Order No. 02/2018 dated 31-12-2018. It states that invoices and debit notes pertaining to the period July 2017 to March 2018 can be uploaded by the supplier in his GSTR-1 up to return of March 2019 (which is to be filed by 10^th April 2019). Therefore, the recipient shall also be eligible to take credit in his GSTR-3B for such ITC up to the return for the period up to March 2019 (which is to be filed by 20^th April 2019)