Availability of Input Tax Credit for FY 2020-21 : GSTN Advisory

No taxpayer shall receive input tax credit in regard records (invoices and debit notes) for supply of goods or services (or both) for Financial Year 2020-21 after the due date of furnishing the return for the month of September 2021, according to Section 16(4) of the CGST Act, 2017. The GSTR-3B is due on the 20th of October 2021 for monthly filers and the 22nd or 24th of October 2021 for non-monthly filers, depending on the taxpayer’s state/UT of registration. In light of this, please take note of the following:

(i) Records (invoices or debit notes) for the Financial Year 2020-21 reported in GSTR-1 after the due date of GSTR-3B in September 2021 would not appear in the recipients’ GSTR-2B as “ITC Available.” Such records will appear in the GSTR-2B section titled “ITC Not Available,” and such ITC will not be auto-populated in GSTR-3B.

(ii) Records (invoices or debit notes) for the Financial Year 2020-21 reported in GSTR-1 beyond the due date of GSTR-3B in September 2021 would not appear in Table-8A of GSTR-9 of the beneficiaries as “ITC as per GSTR-2A.”

It is asked that taxpayers take note of the aforementioned and ensure that their records for the Financial Year 2020-21 are reported on or before the GSTR-3B due date for the month of September 2021, or for the quarter of July to September 2021 in the case of quarterly GSTR-3B filers. Receivers who claim ITC in violation of GST’s legal rules may face legal action from tax authorities.

What is input tax?

Input tax means the central tax (CGST), State tax (SGST), integrated tax (IGST) or Union territory tax (UTGST) charged on supply of goods or services or both made to a registered person. It also includes tax paid on reverse charge basis and integrated tax charged on import of goods. It does not include tax paid under composition levy.

What is Input Tax Credit?

Input Tax Credit means the credit of input tax on the supplies of goods or services or both received by a registered person.

Can GST paid on reverse charge basis be considered as input tax?

Yes. The definition of input tax includes the tax payable under the reverse charge.

Does input tax includes tax (CGST/IGST/SGST) paid on input goods, input services and capital goods?

Yes, it includes taxes paid on input goods, input services and capital goods. Credit of tax paid on capital goods is permitted to be availed in one instalment.

Is credit of all input tax charged on supply of goods or services allowed under GST?

A registered person is entitled to take credit of input tax charged on supply of goods or services or both to him which are used or intended to be used in the course or furtherance of business, subject to other conditions and restrictions.

What are the conditions necessary for obtaining ITC?

Following four conditions are to be satisfied by the registered taxable person for obtaining ITC:

(a) he is in possession of tax invoice or debit note or such other tax paying documents (such as bill of entry or any other document prescribed under the Customs Act, ISD invoice as prescribed in Rule 36(1) of the CGST Rules ).

(b) he has received the goods or services or both;

(c) the supplier has actually paid the tax charged in respect of the supply to the government; and

(d) he has furnished the return under section 39.

Whether all particulars necessary in the documents- tax invoice or debit note or such other tax paying documents for claiming ITC?

If the said document does not contain all the specified particulars but contains the details of the amount of tax charged, description of goods or services, total value of supply of goods or services or both, GSTIN of the supplier and recipient and place of supply in case of inter-State supply, input tax credit may be availed by such registered person.

What is the time limit for taking ITC and reasons therefor?

A registered person cannot take ITC in respect of any invoice or debit note for supply of goods or services after the due date for furnishing the return under section 39 for the month of September following the end of financial year to which such invoice/invoice relating to debit note pertains or furnishing of the relevant annual return, whichever is earlier. So, the upper time limit for taking ITC is 20th October of the next FY or the date of filing of annual return whichever is earlier.

The underlying reasoning for this restriction is that no change in return is permitted after September of next FY. If annual return is filed before the month of September, then no change can be made after filing of annual return. However, in cases of new registration or where a person shifts from composition scheme to regular tax payment or where an exempt supply become taxable, the time limit for taking ITC is one year from the date of invoice of inward supplies. [Section 18(2) of CGST Act]