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: