The Input Tax Credit (ITC) claim forms an essential task in tax management for every GST taxpayer, big or small. Ever since compliance began under GST, there have been various concerns poured in by the taxpayers about paving the way for smooth claims of ITC.
ITC is considered as the vested right of the GST registered recipient. However, there are many conditions attached to it under the GST law, making its claim a complicated and arduous task. With the deadline for filing GSTR-3B of September 2021 passed, many may continue to wonder what happens if the ITC of FY 2020-21 is not claimed yet.
For those who are unaware, GSTR-3B of September 2021 has special relevance for annual compliance. ITC claims of a financial year are barred from being availed upon filing the GSTR-3B for September of the following year. It has been laid out in Section 16(4) of the CGST Act, 2017.
Hence, it can be reasonably assumed that the due date of GSTR-3B for September 2021, which is either 20th, 22nd or 24th of October, is the last date to claim ITC belonging to the FY 2020-21.
The due date to file the GSTR-3B for September 2021 is 20th October 2021 for any monthly return filers. For quarterly return filers, the due dates would be either 22nd October 2021 or 24th October 2021 based on the state or Union Territory in which the taxpayer is registered.
On 17th October 2021, the GST Network also clarified the following points on the same matter-
- Suppose a supplier reports any invoices or debit notes of FY 2020-21 in GSTR-1 after the due date GSTR-3B of September 2021. It shall be differently classified for the recipients. Such ITC will not appear under the ‘ITC Available’ section of GSTR-2B. Instead, these records will be reflected in the ‘ITC Not Available’ section of GSTR-2B. Further, these details do not get auto-populated in GSTR-3B.
- GSTR-9 will not accommodate the ITC on such invoices, or debit notes of FY 2020-21 declared in GSTR-1 after the due date of GSTR-3B of September 2021. In other words, these will not be updated in the ‘ITC as per GSTR-2A’ section of Table-8A of the GSTR-9 for the recipients.
When a taxpayer is claiming ITC, he must make sure if conditions in the GST Act are satisfied. He should have the invoice, receive the goods or services, payment made within the given time limit, and the supplier has filed his return and paid taxes.
These are necessary conditions for claiming ITC. One must note that the new condition (aa) under Section 16(2) is not yet notified in the CGST Act. It states that the recipient can claim such ITC if it is reported by the supplier in his GSTR-1 and it appears in the corresponding GSTR-2B. Since it is not notified, its legal standing is questionable and also countered by many tax experts.
However, the time limit for ITC claims is written in the CGST Act, as explained above. It acts as another primary condition that cannot be ignored. Even if one can take the cover, that clause (aa) is not notified. Hence, reference to GSTR-2B is not legally tenable. One cannot deny that the time limit to claim ITC of FY 2020-21 is over under the law.
There can be many cases of missed ITC claims by the deadline due to the supplier’s delay or fault. With the advisory on hand, there seems to be no scope for claiming such missed ITC now. Further, any wrongful ITC claims after the deadline are against the GST law and could lead to action by the authorities.
While the authorities requested the taxpayers to note the above points a few days before filing GSTR-3B of September 2021, appropriate steps must have been taken on faulting suppliers. CBIC must have conducted necessary awareness programmes and workshops for taxpayers well ahead of the deadline, especially small businesses.
The taxpayers must have been nudged to report invoices of FY 2020-21 and make the due corrections in GSTR-1 at least a month in advance. The recipients could have genuinely reaped the benefits easily.
However, many businesses faced hassles of multiple follow-ups with their suppliers for invoice reporting. Despite the efforts taken, some suppliers continue not to comply or have delayed this reporting inconveniencing their recipients.
Several taxpayers and experts took to social media asking for an extension in the time limit to claim ITC for FY 2020-21 up to 31st December 2021, also the due date to file GSTR-9 and GSTR-9C for FY 2020-21. One should wait and watch for the government to take a suitable call for allowing any such extension after October 2021 ends.
For any clarifications/feedback on the topic, please contact the writer at email@example.com
Annapoorna, popularly known as Anna, is an aspiring Chartered Accountant with a flair for GST. She spends most of her day Singing hymns to the tune of jee-es-tee! Well, not most of her day, just now and then.