Input Tax Credit (ITC) Can be Claimed after September 2020

Last Updated On: Oct. 19, 2020, 11:56 p.m.


What is Input Tax Credit?

ITC is considered to be the backbone of GST. Input Tax Credit means GST charged on him/her on any supply made by him/her in the course of his/her business. The most critical activity for every business is to settle its tax liability and fulfill the condition to claim ITC.


Conditions to claim ITC under GST:

  • A Registered person will be able to claim ITC on the fulfillment of the following conditions:
  • A registered person should possess a tax invoice or debit note.
  • Receipt of goods sold or supply made.
  • A registered person should furnish his/her return.
  • In case of goods received at lot or on the installment basis, ITC can be availed when the last lot or installment is received.
  • A registered person cannot claim ITC if depreciation is allowed on the tax component of capital good.


Can Input Tax Credit(ITC) be claimed after September 2020?

As per the provisions of section 16(4) of the CGST Act 2020, any pending Input Tax Credit related to the Financial year 2019-20 can be claimed up to the due date of GSTR-3B return for the month of September 2020.

Therefore, the last date for claiming the Input Tax Credit which is on hold/pending related to the Financial year 2019-20 is 20th,22nd,24th October 2020.

As per the latest notifications issued by the Central Board of Indirect Tax issued vide Circular No. 142/12/2020-GST dated 9th October 2020,  ITC for the months from February 2020- August 2020 if it is availed as per books, then it is required has to be reconciled with GSTR-2A and excess ITC which was compared with 110% of eligible ITC reflected in GSTR-2A for February 2020 to August 2020)is required to be reversed in GSTR-3B for the month of September 2020.

 A separate ITC reconciliation for the month of September 2020 is to be done with GSTR-2A before filing the Form GSTR-3B. In case if there is any failure to reverse excess claimed ITC for the period from February 2020 to August 2020, then it would be treated as “availment of ineligible ITC” which means such ineligible ITC would attract interest if utilized against output GST liability for the respective months (i.e. from February 2020 to August 2020).

When the Reconciliation of ITC with GSTR-2A is done there certain things to be kept in mind. These suggestions are to safeguard and protect the interest of the company.

Input Tax Credit (ITC) can be on hold in the following circumstances:

1. The supplier has reported the transaction under B2C instead of B2B:

  • ITC is availed on the basis of a valid document.
  • The assessee has received the goods/services
  • The supplier has paid GST to the Government, and
  • The supplier has filed GST return u/s 39 (i.e. GSTR-3B),

If the above mentioned four conditions are satisfied, the company can claim ITC even if the purchases are not reflected in the form GSTR-2A but the company should obtain a declaration from the respective suppliers by mentioning details of tax invoices and the fact that such tax invoices are inadvertently reported in B2C instead of B2B. This declaration would certainly be one of the strongest documentary evidence for future reference / litigation.

2.  Suppliers have wrongly reported GSTIN of the company:

Even in such cases, the company should obtain a declaration from the respective suppliers by mention the details of tax invoices and the wrong reporting of GSTIN of the company.

3. Suppliers have not filed GSTR-1:

As per the rule 36(4) of CGST Rules, 2017, restricts ITC to 110% of the eligible ITC reflected in GSTR-2A, it cannot override the provisions of section 16(2) of the CGST Act, 2017. It is settled law that the rule cannot override the provision of the Act under which the Rule is framed.

Therefore, when all the conditions are satisfied u/s 16(2) of the CGST Act, 2017, ITC should be available even though GSTR-1 is not filed.


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