Time limit for availing ITC: Due date of filing of return for the month of September of succeeding financial year or date of filing of annual return, whichever is earlier [Section 16(4)]
ITC on invoices pertaining to a financial year or debit notes relating to invoices pertaining to a financial year can be availed any time till the due date of filing of the return for the month of September of the succeeding financial year or the date of filing of the relevant annual return, whichever is earlier.
It may be noted that the return for the month of September is to be filed by 20th October and annual return of a financial year is to be filed by 31stDecember of the succeeding financial year.
So, the upper time limit for taking ITC is 20th October of the next financial year or the date of filing of annual return, whichever is earlier. The underlying reasoning for this restriction is that no change in return is permitted after September of next financial year. If annual return is filed before the month of September, then no change can be made after filing of annual return.
The time limit u/s 16(4) does not apply to claim for re-availing of credit that had been reversed earlier.
Example – Hercules Machinery delivered a machine to XYZ in January 2019 under Invoice no. 49 dated 28th January, 2019 for Rs. 4,15,000 plus GST, and undertook trial runs and calibration of the machine as per the requirements of XYZ. The amount chargeable for the post-deliveryactivities was covered in a debit note raised in April 2019 for Rs. 50,000 plus GST. XYZ did not file its annual return till October, 2019.
Though the debit note was received in the next financial year, it relates to an invoice received in the financial year ending March 2019. Therefore, the time limit for taking ITC available on Rs. 50,000 as well as on Rs. 4,15,000 is 20thOctober, 2019; earlier of the date of filing the annual return for 2018-19 or the return for September 2019.