Section 118 of Finance (No.2) Act, 2024 is made effective from 27.09.2024 vide Notification no. 17/2024 dated 27.09.2024. In effect the sub-section (5) of section 16 which was inserted vide section 118 is effective now. The said sub-section (5) is reproduced from Finance (No.2) Act, 2024 as below –
In section 16 of the Central Goods and Services Tax Act, with effect from the 1st day of July, 2017, after sub-section (4), the following sub-sections shall be inserted, namely:––
“(5) Notwithstanding anything contained in sub-section (4), in respect of an invoice or debit note for supply of goods or services or both pertaining to the Financial Years 2017-18, 2018-19, 2019-20 and 2020-21, the registered person shall be entitled to take input tax credit in any return under section 39 which is filed up to the thirtieth day of November, 2021.
New timeline
This newly inserted sub-section legalise the delayed claim of input tax credit on invoice or debit note pertaining to first four year of GST implementation i.e. FY 2017-18 to 2020-21 if they were claimed in any of GSTR-3B filed up to 30.11.2021. In other words, for all the financial year from 2017-18 to 2020-21 the time line to claim input tax credit is now declared as 30.11.2021. As such the credit claimed after the original timeline but before the new timeline stands correct as on today.
Original Timeline
The timeline to claim ITC is given under sub-section (4) of section 16 as 30th November. Initially, the timeline was 30th of September, but from 01.10.2022 the timeline was changed to 30th November. Thus, for F.Y. 2021-22 and onward the timeline is 30th November and for prior years the timeline was 30th September.
Further, in the case of M/s. M. Trade Links, the Honorable High Court of Kerala acknowledged the difficulties faced by the taxpayer during the initial implementation year of GST and accordingly applied the 30th November timeline to the period prior to 01.10.2022 as well, making it applicable since FY 2017-18.
Also, for the first year the timeline to claim ITC was extended till March 2019 vide Order No. 02/2018 -Central Tax dated 31st December, 2018.
The different timelines for the first four years as changed in course of time is given in the table below-
| F.Y. | Original timeline | Extended vide Order no.2/2018 dt 31.12.18 | Extended basis M/s. M Trade Link | Extended Now by sec. 118 of FA 2024 |
| 2017-18 | 20.10.2018 | 20.04.2019 | 30.11.2021 | |
| 2018-19 | 20.10.2019 | 30.11.2019 | 30.11.2021 | |
| 2019-20 | 20.10.2020 | 30.11.2020 | 30.11.2021 | |
| 2020-21 | 20.10.2021 | 30.11.2021 | 30.11.2021 |
Relevance of new timeline
The extension of timeline for first year i.e. 2017-18 was more relevant as the same was notified before the extended time limit elapsed. That is, Order was issued on 31.12.2018 to extend the timeline to 20.04.2019. So, the taxpayer were able to take the credit till 20.04.2019 . But, the amendment in discussion now is a sort of validation on the past period action already taken by the taxpayer in claiming ITC beyond the timeline.
Majority of the taxpayers would have foregone the credit if for any reason they were unable to claim them within the timeframe. So, this extension is probably not for them because they cannot go and take the credit now. But for the one who claim the credit beyond timeline knowingly, on the ground that their credit is substantial their delayed claim is now validated if claimed upto 30.11.2021. Their bold action bore fruit now.
This notification is also favourable to those taxpayer who claimed credit beyond timeline and went through without notice of the audit 9/9c and section 65.
Suppose if the time line stated is 30.11.2024 instead of 30.11.2021 then all taxpayers who genuinely missed the timeline to claim credit would immediately avail the credit now. And those who have taken credit post the time limit but reversed it on 9/9C audit, they would reclaim the credit now.
But by restricting the timeline to 30.11.2021 the govt is targeting to settle the piling up cases on delay claim of input tax credit. Thereby benefitting the taxpayer who boldly claimed the credit on the hope that one day government would extend the timeline. But the tax payer who strictly followed the statutory timeline and refrained from claiming the credit are outside the scope of this benefit.
The another such amendment is section 128A of CGST Act where interest and penalty is waived if the disputed tax is paid for pending cases from FY 2017-18 to 2019-20. This does not talk about taxpayers who already paid interest and penalty.
Author CA Saradha Hariharan presented her views on sec 128A. Read it at : New Section 128A – What The Future Holds for GST Amnesty Scheme
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