Time limit for taking Input Tax Credit pertaining to Financial Year 2017-18

It was a bold step for the Government to introduce GST to meet its deadline of July 1, 2017 though its infrastructure was not fully ready. The journey has been challenging for the government and even till date, the government has not introduced the functionality for filing GSTR-2 and GSTR-3 returns. Recently, the taxpayers faced huge inconvenience in reconciling their input tax credit with GSTR-2A under the impression that the last date of availing credit for Financial Year 2017-18 (‘FY 2017-18’) was expiring on October 25, 2018.

It is useful for the taxpayers to know the last date for taking Input Tax credit (‘ITC’) for FY 2017-18. In this regard, please find ‘NITYA’s Outlook – Issue 2’ on time limit for taking ITC pertaining to FY 2017-18.

The recent press releases by the Government suggested that the time limit for taking ITC for FY 2017-18 was the due date of filing of GSTR-3B i.e. October 25, 2018.

Interestingly, the view of the government that credit for FY 2017-18 could have been availed till October 25, 2018 is mis-founded for the reasons given below.

Section 16(4) of the Central Goods and Services Tax Act, 2017 (‘CGST Act’) states that a registered person can take the ITC on earlier of the following dates:

• Due date of furnishing of return under Section 39 for September of following financial year; or
• The due date of furnishing of the annual return.

Notably, Section 39 of the CGST Act prescribes GSTR-3 as the ‘return’. This provision does not contain any reference to GSTR-3B. Further, Rule 61 of the Central Goods and Services Tax Rules, 2017 (‘CGST Rules’) does not provide that GSTR-3B is a replacement of GSTR-3 but prescribes it as an additional return. Hence, the return under Section 39 shall mean GSTR-3 (and not GSTR-3B).

Since the due date of filing of GSTR-3 for September 2018 has been formally deferred till March 2019 (vide Notification No. 44/2018-Central Tax dated September 10, 2018), the first clause of Section 16(4) of the CGST Act shall not apply. Resultantly, the last date of taking credit under Section 16(4) is the due date of furnishing of annual return i.e. December 31, 2018. If the government defers the due date of furnishing of annual return, credits for FY 2017-18 can be taken till such extended date.

Therefore, taxpayers can avail any input tax credit pertaining to FY 2017-18 till December 31, 2018.