ITC under GST: Deadline to Claim and Revise for FY 2023-24

ITC under GST allows registered businesses to offset the taxes paid on their purchases against their tax liabilities. ITC helps avoid double taxation and lower the overall tax burden.

The introduction of Input Tax Credit (ITC) benefits businesses and creates an equitable tax system by stopping taxes from accumulating and preventing any price increase.

As per Section 16(1) of CGST Act, 2017, a registered taxable person under the GST Act who is paying due in the course or furtherance of business can claim and avail of ITC credited in the electronic ledger.

Eligibility to claim ITC

• The registered person must possess a tax invoice issued by the supplier of goods or services or both or a Debit Note issued by a supplier

• The registered person has received such goods or services or both

• The registered person has filed the returns under section 39 of the Act

• The registered person has paid the tax under section 41 of the Act

• Goods or services are used only for business purposes

Ineligible ITC under GST – Section 17(5)

• Goods that are lost, stolen, destroyed, written off, or disposed of by gift or as free samples

• Goods or services used for personal consumption

• GST on membership fees for clubs, health and fitness centres

• GST on food and beverages, outdoor catering, beauty treatments, health services, cosmetic surgery, plastic surgery etc

• GST on motor vehicles unless used for specified purposes

• Travel benefits to employees

Deadline for claiming ITC

As per section 16(4) of the CGST Act, 2017, A registered person shall not be entitled to take the input tax credit in respect of any invoice or debit note for the supply of goods or services or both after

• the thirtieth day of November following the end of the financial year to which such invoice or debit note pertains or

• furnishing of the relevant annual return, whichever is earlier

Therefore, for the financial year 2023-24, the deadline to claim ITC is earlier than 30th November 2024 or the date of filing of the GSTR-9 form due by 31st December 2024.

Reversal of ITC

There are scenarios where ITC must be reversed-

• Non-payment of consideration within 180 days

• Non-payment of tax by the supplier

• Claim of credit by a banking company or a financial institution

• Goods used partially for business and partially for personal purposes

• Credit note issued by the seller

Section 16(3) of the CGST Act, 2017, the registered persons are barred from claiming ITC if they have claimed depreciation on the tax portion of the capital goods and plant and machinery. Any claim of such ITC must be reversed before the closing of books for the relevant financial year.

The deadline mentioned above, if missed, may be subject to penalties and interest, it is advised to consult a Tax Professional or a Chartered Accountant to understand ITC claims and the other consequences.