What is the time limit for claiming ITC?

In India, the time limit for claiming Input Tax Credit (ITC) is governed by the provisions of the Goods and Services Tax (GST) Act, not the Constitution of India. The provisions for claiming ITC are defined under the Central Goods and Services Tax Act, 2017 (CGST Act), as well as the rules laid down in the GST Rules.

Time Limit for Claiming ITC under GST:

The time limit for claiming ITC is provided under Section 16(4) of the CGST Act and the related GST Rules.

Section 16(4) of CGST Act, 2017:

According to Section 16(4) of the CGST Act, a registered taxpayer can claim Input Tax Credit (ITC) only within a specified time period. The provision reads:

“A claim for Input Tax Credit for a financial year can be made up to the due date of filing the return for September of the following financial year or the actual date of filing the annual return, whichever is earlier.”

This essentially means that:

1. The time limit for claiming ITC for a particular financial year is the earlier of:
   • Due date of filing the GST return for the month of September of the following financial year, or
   • The date of filing the Annual Return for that financial year.
2. Example: For the financial year 2023-24, the latest date for claiming ITC would be:
   • Due date of the GST return for September 2024 (typically, this would be around October 20, 2024), or
   • The date of filing the Annual Return for 2023-24 (usually December 31, 2024, unless extended).

Key Points Regarding Time Limit for ITC:

• Claiming ITC on Invoices: ITC can be claimed only on valid invoices or debit notes issued within the prescribed time limit, as per Section 16(4).
• Missing ITC: If the taxpayer fails to claim ITC by the end of the prescribed time period, it cannot be claimed in a subsequent period.
• Reversal of ITC: If ITC is not claimed within the time limit, it has to be reversed in the subsequent period.

Relevant Provisions from the GST Rules:

The GST Rules further clarify the time limits for ITC claims:

1. Rule 36(4) of the CGST Rules: This rule specifies that taxpayers can claim ITC for only those invoices that have been reported by their suppliers in the GSTR-1 form and matched in the GSTR-2A/2B for the relevant period.
2. Rule 89: This rule specifies the manner of filing a claim for ITC in case of a refund application, including the relevant time limits.

1. Time Limit for ITC Claims on Missing Invoices:

• If an invoice is missed in the current period, it can be claimed in subsequent periods as long as it falls within the prescribed time limit mentioned above.

2. No ITC Beyond the Time Limit:

• Once the time limit for claiming ITC has passed, the taxpayer cannot claim the credit in any subsequent periods.

Landmark Cases Related to ITC and Time Limits:

While there aren’t many specific “landmark cases” directly on the time limit for claiming ITC, there have been some important cases related to the eligibility and validity of ITC in general, and its time limits indirectly.

Case 1: M/s. J.K. International v. Union of India (2020):

• This case dealt with the eligibility of ITC when the supplier failed to upload the invoice in the GST system within the specified time. The court held that if the supplier failed to upload the invoice, the buyer could not claim the ITC for the same.
• The case also highlighted the importance of complying with time limits and the requirement for matching invoices under Section 16(2) of the CGST Act and the GST Rules.

**Case 2: AAR Maharashtra – M/s. Ricoh India Ltd. (2019):

• This case involved the issue of whether a taxpayer could claim Input Tax Credit (ITC) on capital goods that had been purchased in the previous financial year but the claim was made beyond the statutory due date.
• The Authority for Advance Ruling (AAR) ruled that since the claim was not made within the prescribed time limit under Section 16(4), the ITC could not be claimed after the expiration of the time limit.

Case 3: S. R. Batliboi & Co. LLP (2019):

• In this case, the issue was whether the taxpayer could claim ITC on an invoice for which payment had not been made by the due date. The Delhi High Court ruled that ITC can only be claimed when the invoice is properly reported in the GST return and the supplier has paid the tax. This case also indirectly discussed the importance of the timing of claims and its impact on ITC.

**Case 4: Jindal Stainless Ltd. v. Union of India (2021):

• The Supreme Court addressed issues related to input tax credit (ITC) for inputs used in goods exported outside India. This case indirectly impacted the understanding of timelines for claiming ITC, especially in cases where the taxpayer had delayed their claims.

Summary of Time Limit Provisions:

• Section 16(4) of the CGST Act: The time limit to claim ITC is the earlier of September of the following financial year or the date of filing the annual return for the year.
• Taxpayers must ensure that the invoices and returns are correctly filed to claim the credit within the prescribed time frame.
• GST Rules (such as Rule 36) regulate the matching of invoices and the conditions under which ITC can be claimed.

To conclude, the time limit for claiming ITC is clearly defined in Section 16(4) of the CGST Act. Businesses should be vigilant about the due dates and ensure they claim the input tax credits within the stipulated period to avoid losing their entitlement to such credits. The judicial rulings emphasize the importance of adhering to the time limits and proper filing of returns for claiming ITC under GST.