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In a significant update to the Central Goods and Services Tax (CGST) Act, Section 16 has been amended with the insertion of two new sub-sections. This change aims to address input tax credit (ITC) claims for past financial years and offers relief to taxpayers whose GST registration was cancelled and later revoked.
Key Highlights of the Amendment
- ITC Claims for Past Financial Years:The new sub-section (5) allows registered persons to claim ITC on invoices or debit notes pertaining to financial years 2017-18, 2018-19, 2019-20, and 2020-21. This can be done in any return filed under Section 39 up to November 30, 2021, providing much-needed leeway for taxpayers who may have missed out on claiming credits during the earlier return filing periods.
- ITC Availability After Revocation of Registration Cancellation:Sub-section (6) focuses on cases where a registered person’s GST registration is cancelled under Section 29 and later reinstated via an order under Section 30, or through appellate authority decisions. The taxpayer will be eligible to claim ITC for invoices or debit notes, as long as the credit was not restricted under sub-section (4) at the time of cancellation. This ITC can be claimed in returns filed under Section 39 by November 30 of the relevant financial year or within 30 days from the date of revocation of cancellation whichever is later.
Impact of the Amendment: This amendment provides critical relief to businesses, especially those dealing with delays in filing returns due to the pandemic or other operational challenges. It also brings clarity to the process of claiming ITC when registration is cancelled and later restored, ensuring that businesses do not lose out on legitimate credits during periods of disruption. Taxpayers are advised to review their records and make use of the extended timelines for ITC claims as per the new provisions.
