The main objectives of GST are to prevent the cascading effect of taxation and maintain a steady credit flow; however, the GST Law has regulations that restrict the acceptance of Input Tax Credit for the taxes on goods and services purchased or availed.
All registered taxpayers are eligible for Input Tax credit (ITC) under the Goods and Service Tax regime on all inputs used or anticipated to used in the course of conducting business or for its expansion, whether they are for goods or services.
With a few limitations, ITC is applicable to capital goods used in the conduct of business.
In this article, we will give you all the details regarding the maximum time limit for claiming ITC under the GST.
Let’s dive into the topic!
What is Input Tax Credit?
A Service provider has to collect the GST on Goods and Services. In A Service recipient, they have to pay the GST on the goods purchased or services availed from a registered service provider.
The Good purchased or Service received through the Purchaser or Service Recipient is ‘input’ which will result in an output of the Service Recipient who will then become a trader or a service provider.
Any tax on the input is known as an input tax credit allowed as a deduction from the Output tax liability of a Person.
What is ITC claim in GST?
To qualify for an input tax credit, businesses must follow the below-mentioned guidelines:
- The buyer must have a legitimate tax invoice, debit note, or other required document issued through an authorized dealer.
- Buyer must receive the good or service. The credit is applied to the tax invoice for the last installment if the product is received in installments.
- The supplier must have paid the government the tax owed on the buyer’s purchases, either in cash or through submitting an input tax credit claim.
- The supplier must also have filed GST returns. The most notable modification made by GST to the current tax structure is the requirement that for purchases to qualify for an input tax credit, the supplier must be GST compliant and have paid the tax which was deducted from the purchase.
- It is only possible to claim ITC on invoices and debit notes when the relevant information is given in Form GSTR-1 / IFF and conveyed to the registered person in Form GSTR-2B. This only applies upon the notification of section 16(2)(aa) of the CGST Act, 2017.
- The buyer must pay the supplier for the supplies received (including tax) within 180 days of the invoice’s issue date in order to be eligible for an ITC. If the purchaser does not do this, the credit they would have received will be applied to the output tax they owe. The buyer will be eligible to claim ITC if they pay the amount that the taxpayer owes the provider. Credits corresponding to the payment can be obtained in the event of a partial payment.
- Transportation of money for or by a banking corporation or financial institution, including the use of motor vehicles with a seating capacity of more than thirteen passengers, ships, and aircraft.
- General insurance, repair, and maintenance for automobiles, ships, and aircraft.
- Goods or services that, under any legislation, a business is required to offer to its employees.
What is the time limit for claiming ITC under GST?
Only tax invoices and debit notes that are less than a year old are eligible for ITC claims.
In all other cases, the ITC claim submission deadline is the earliest of the following:
- Prior to submitting accurate GST returns for September following the conclusion of the fiscal year that applies to that invoice. For a June 26, 2018, invoice, for instance, the ITC must be claimed before September 2019.
- Prior to submitting an appropriate yearly return.
However, following the change made to Section 16(4) through the Finance Act of 2022, “the due date of furnishing the return under Section 39 for the month of September” changed to “30th of November.”
What is the last date to claim ITC under GST for 2021-22?
The maximum time frame for claiming ITC in association with an invoice from the financial year 2021–2022 is
- 30 November 2022, which is the first to pass after the end of the appropriate fiscal year, or
- According to Section 44, the due date for filing an annual return (FORM GSTR-9) is December 31, 2022.
Frequently Asked Questions(FAQs):
1. What is the last date for claiming ITC?
The deadline for filing an annual return (FORM GSTR-9) is December 31, 2022, in accordance with Section 44 and Rule 80 of the Income Tax Act of 1961.
2. Can I claim GST credits for previous years?
No, you cannot claim GST credit for previous years. No input tax credit given following the filing of the GST return for the September fiscal year that follows the end of the financial year to which the relevant invoice relates, or, if earlier, the filing of the relevant annual return.
3. What is the Rule 37 in GST?
In GST, according to Rule 37, every registered person must reverse the ITC claimed on inbound supplies for which he has failed to pay consideration to the supplier within 180 days of the invoice’s issue date.
4. Can I claim previous month ITC?
According to Section 54(3) of the CGST Act of 2017, a registered person can submit a refund claim for unused input tax credits at the end of any tax period. On a monthly basis, a taxpayer can request a return of any unused ITC.
5. Can we claim ITC of last year in the current year?
The taxpayer can claim ITC until the GSTR 1 return filed in September of the following year, OR during the submission of the Form GSTR 9 annual return.
We hope you found this article about the maximum time limit for claiming an input tax credit under GST helpful. If you have any doubts, do let us know in the comment section below. For more information about GST-related topics, visit our website, InstaFiling.
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