Ineligible itc inder section 16(4) & ITC restricted due to Pos Rules

Sure! Here's an explanation for both your queries with relevant law references:

1. Ineligible ITC under Section 16(4) & ITC restricted due to Place of Supply (POS) Rules

Section 16(4) of CGST Act, 2017 provides a list of goods and services on which Input Tax Credit (ITC) is not allowed. Some common examples:

• Motor vehicles and other conveyances, except when used for specific purposes like further supply, transportation of passengers, or imparting taxable services (e.g., driving school).

• Goods and services used for personal consumption.

• Membership of a club, health and fitness center.

• Rent-a-cab, life insurance, health insurance, etc. (except if mandatory for your business).

• Works contract services related to immovable property (except certain cases).

• Goods lost, stolen, destroyed, written off, or disposed of by way of gift or free samples.

Relevant law:

• Section 16(4) CGST Act, 2017

• Section 17(5) (list of blocked credits)

ITC Restricted due to Place of Supply (POS) Rules:

Under GST, eligibility of ITC also depends on whether the supply is interstate or intrastate and the place where the supply is deemed to have occurred.

• If the place of supply rules categorize a supply as an interstate supply, the supplier must charge IGST; if intrastate, CGST and SGST.

• If POS is wrongly determined, ITC may be wrongly claimed or restricted.

For example, if a registered person claims ITC on a supply based on a POS rule that makes the supply outside the state, but the actual supply is inside the state, then ITC may be disallowed or reversed.

Relevant law:

• Section 16(2) CGST Act: ITC is allowed only if supplier has paid the tax and details are uploaded.

• Section 16(3): Reversal of ITC if goods/services used partly for exempt/non-business use.

• Place of Supply Rules (GST Rules, Schedule I & II)

2. Return filed post annual cut-off

• GST law mandates that returns for a particular financial year should be filed within the due dates prescribed for that year (typically, GSTR-3B monthly returns and Annual Return GSTR-9 by 31st December of the next financial year).

• Filing returns post annual cutoff (i.e., after the due date) is allowed but may attract late fees and penalties as per Section 47.

• However, if ITC was claimed on delayed returns (filed after the cutoff), then the department may disallow ITC or demand reversal/penalty on ITC claimed.

• Late filing can also lead to discrepancies in the ITC matching between GSTR-3B and GSTR-2A/2B.

Relevant law:

• Section 39 & 44 of CGST Act (return filing provisions)

• Section 47 (late fees for delay in furnishing returns)

• Rule 36(4) of CGST Rules (ITC claim restriction if not in GSTR-2B)

Summary:

These are two separate ITC blocks and need different handling.

Section 16(4) lapse: ITC must be claimed by the earlier of (a) the GSTR-3B due date for November of the next financial year, or (b) the date of filing the annual return. For FY 2024-25 invoices the cutoff was December 20, 2025. ITC beyond this cutoff is permanently ineligible and must be reversed in Table 4B of GSTR-3B.

PoS rules restriction: ITC is blocked when the place of supply under IGST rules falls outside your registration state. For example, if your GSTIN is in Telangana but the service was supplied with Maharashtra as the place of supply, IGST paid on that cannot be claimed as input. This is a structural block, not a timing one, and applies invoice by invoice.

For GSTR-3B reporting: both categories belong in Table 4B (ineligible ITC). The Section 16(4) lapse goes under ineligible as per Section 16(4), and PoS blocks go under ITC restricted due to PoS rules.

This [Section 16(4) ITC guide](https://taxgarden.in/blog/gst-section-16-4-itc-time-limit-annual-return-india-2026) covers how to calculate which invoices have lapsed and how to reverse them correctly.