Ineligible ITC under section 16(4) and

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Ineligible ITC under Section 16(4) refers to input tax credit not claimed within the prescribed time limit. ITC restricted due to Place of Supply rules arises when GST is charged in a different state from the recipient's registration state, such as hotel accommodation expenses in another state, making the credit ineligible in GSTR-2B.

Daya

Daya (Querist)
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23 February 2025 what is provision of
ineligible ITC under section 16(4) and ITC restricted due to POS provision.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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24 February 2025 As you are aware that the GSTR3B form was recently modified with reclassification of tables in ITC Section. Now Table 4(D)(2) is for Ineligible ITC under section 16(4) & ITC restricted due to PoS rules Here we need to declare the values of ineligible under two categories:
a. ITC not availed because of time limit exhausted for availing ITC (Invoice related to previous year but not claimed till 30th day of November of the subsequent year) b. ITC not available because of PoS (Place of Supply) rule restrict the same.
So what is this ITC restriction due to PoS rules?? Let us discuss in detail Place of Supply comes under IGST Act, 2017 which determines the Place of Supply for Goods and / or services and determination of the tax based on the Place of Supply. Section 10, 11, 12 & 13 speaks about various situations and scenarios of supplies and derived the place of supply for each type of situations. For an example if you are having business in Chennai (Tamil Nadu state) and for a business purpose you are travelling to Mumbai (Maharashtra state) and staying there for a week in a Hotel, the Hotel will issue a bill addressing to your Chennai address but charging CGST/SGST instead of IGST. This is because of the Place of Supply of Services in India as determined under Section 12 of IGST Act. Since the service of Accommodation happening in that premises and ends in the same premises which is located in Maharashtra, the GST chargeable will be CGST/SGST even though the recipient address is other state. In this case, the Hotel will file their GSTR1 and it also reflects in your GSTR2B but you cannot avail the ITC for the same because in GSTR2B report it is specifically mentioned as “ineligible” with a reason “PoS different from Recipient State”. This means, even your expenses is for business purpose, CGST Act doesn’t block ITC of Hotel Accommodation for Business purpose, if the Accommodation happens in a state other than your base state, ITC for the same cannot be available.

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