Time Limit to avail the ITC

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Last updated on September 29th, 2022 at 07:51 pm

Time Limit to avail the ITC

Section 16(4) of the CGST Act,2017 prescribes the time limit to the taxpayer for availing the input tax credit in respect of any invoice or debit note for the supply of goods or services or both made during the financial year.

What was the time limit for availing the ITC as per section 16(4) of the CGST Act,2017? [Applicable up to FY 2020-21]

The time limit for availing the ITC as per section 16(4) of CGST Act,2017 will be earlier of the following: –

  • Due date of furnishing the GSTR 3B for the month of September following the end of the financial year.

OR

  • Due date of furnishing the GST Annual Return

Is the time limit for availing ITC as per section 16(4) AMENDED?

YES.

The amendment in section 16(4) was amended in the Union Budget 2022 and was included as clause(b) of section 100 of the Finance Act 2022

AND…

The above-proposed amendment is notified vide a  CGST notification no. 18/2022 dated 28th September 2022 w.e.f. 1st October 2022.

What is the time limit for availing ITC as per amended section 16(4)?[Applicable from FY 2021-22]

The time limit for availing the ITC as per section 16(4) of CGST Act,2017 will be earlier of the following: –

  • 30th November following the end of the financial year.

OR

  • Due date of furnishing the Annual Return in Form GSTR 9.

Why was the stipulated time limit u/s 16(4) increased?

In my opinion,

  • The amendment would have provided the GST registered taxpayer a little more time to avail of the input tax credit which was missed to be availed during the financial year.
  • Even the books of accounts are audited and financial statements are finalized during the same time and taxpayers would come to know of any missed/unavailed ITC (Tax Audit Due Date- 30th September of Assessment Year).

Though practically after the restriction of availing ITC only to the extent of appearing in Form GSTR 2B and the introduction of section 16(2)(aa), the chances of missing any availment of ITC and utilizing the benefit of the time limit prescribed in 16(4) are negligible.

Read more about>>Seamless flow of credit. Myth or Reality? [Sec 16(2)(aa)]

What is the due date to avail the ITC u/s 16(4)? 

Up to FY 2020-21 – The due date to avail of the input tax credit u/s 16(4) was

  • Monthly Filers – Due date of GSTR 3B for the month of September
  • Quarterly Filers – Due date of GSTR 3B for the quarter ending September.

From 2021-22 & onwards – The due date to avail of the input tax credit u/s 16(4) is 30th November which  effectively is

  • Monthly Filers – Due date of GSTR 3B for the month of October
  • Quarterly Filers – Due date of GSTR 3B for the quarter ending September.
Financial Year Due Date
 GSTR 3B of Sep Annual Return 
2021-22 20.10.2022 30.11.2022 31.12.2022
2020-21 20.10.2021 28.02.2022
2019-20 20.10.2020 31.12.2021
2018-19 20.10.2019 31.12.2020
2017-18 25.10.2018 05.02.2020 / 07.02.2020

 

Conclusion

When an amendment is made, it is widely circulated and telecasted through social media this creates an impression in the minds of taxpayers that whatever is proposed in the Budget is implemented.  The confusion comes to an end as the amendment to sub-section 4 of section 16 of the CGST Act,2017 which was proposed is notified now.



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Disclaimer: The above content is for general info purpose only and does not constitute professional advice. The author/ website will not be liable for any inaccurate / incomplete information and any reliance you place on the content is strictly at your risk.

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4 Comments

  1. For the FY 2021-22? Last date to avail ITC will be 20th Oct for monthly return filers??

    • Yes For FY 2021-22,
      It will be 20th Oct 2022 for monthly filers.
      It will be 22nd Oct 2022/24th Oct 2022 for quarterly filers.

      If the proposed amendment is not notified before the above dates.

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