Understanding section 16 (4) of CGST act-time-limit-avail-itc

Updated on January 28, 2026 08:14:24 AM

Section 16(4) of CGST Act 

A registered person can not take input tax credit with regards to the debit note or invoice in respect of the supply of the goods and services after 30 november either end of the financial year to which debit note ot invoice is related or the relevant return is filled whichever in earlier. If within specified time frame taxpayer fail to avail input tax credit that will result in increase in tax liability.

section 16 (4) of CGST Act ITC defines the time limit to claim input tax credit earliest of the either annual return date or 30 november of the next F.Y. Get help from Profesional Utilities to solve any problem related to the GST.

 

Table Of Content

What is the section 16 (4) of CGST Act?

section 16 (4) of CGST Act  is defined as specified time frame in which registered taxpayer is required to claim input tax credit. Specific transaction or circumstances defined the exact time. Filing date of the monthly or quarterly return or annual return filing by the due date for financial year whichever is earlier.

 

Section 16 (4) of CGST Act writ petition

1. Registered person is not eligible to claim input tax credit for supply of goods and services either for debit note or invoice or both after -

Under section 39 due date of filing of the return is 

• September month following the end of the financial year of which such debit note pertaining to the invoice or invoice are issued 

or 

• Date on which relevant annual return is furnished.

Whichever is earlier

• Whereas time limit to avail the ITC for the supply of goods or services or both with regards to the debit note or invoice - 

Date of the annual return on which it is furish.

Or 

Under section 39(1) the month of September following the end of the fiscal year to which such invoice or an invoice relating to such debit note relates is the due date for filing a return pursuant.

whichever is earlier

• Under section (4)(4)(1) for every financial year annual return is filled on or before 31st December after the conclusion of such a financial year.

Return need to be filled on 20 october for the month of the september and on 31 december of the succeeding financial year as annual return of the financial year.

Therefore, The deadline for claiming ITC is October 20th of the following fiscal year or the actual date that the annual report was filed whichever is earlier.

• This restriction is in place because no changes to returns are allowed beyond September of the following fiscal year.
•  No changes may be made after the yearly return has been filed if it is filed before the month of September.

Section 16 (4) of CGST Act challenged

Exception 

Under Section 16(4) of CGST Act  re-availing of credit time limit does not apply which is already revised earlier ie after period of the 180 days from which invoice has been reversed from the issue date of the invoice due to non payment to the supplier by the supplier.

Impact of the section section 16 (4) of CGST Act

• Documentation is importance - To claim ITC Proper documentation is needed. If the documentation is not correct result in rejection in ITC Claim. Complete and correct records of all the expenses and purchase need to be maintain by the businesses. To levied with provision robust accounting system is needed.
• Business are effected - For the business purpose input tax credit can be claimed to ensure that tax evasion is avoided and ITC can be claimed. This also promote accountability of the business for the ITC Claimed and transparency is ensured.
• Requirement of compliance - In CGST Act the provision of section 16(4). This act make sure that provision of the act are known to the business and complied also. Their are legal implication and penalties which prove to be burden to the business like small businesses.

Conclusion

Section 16 (4) of CGST Act registered taxpayer need to claim input tax credit within prescribed time limit otherwise they loss the right to claim specific credit. Tax liability of the taxpayer may increase with failure to claim input tac credit. Business With the help of the Section 16 (4) of CGST Act ITC can be claimed for avoidance of the tax evasion and for legitimate business purpose. For genuine claim of ITC it critical to maintain proper documentation.