Time limit to claim credit of GST paid under RCM

[Ronak Golecha]

Time Limit for claiming credit of tax paid under reverse charge

Section 16(4) of the Central Goods and Services Tax Act, 2017 (CGST Act, 2017), provides the time limit for claiming credit under GST. As per the said section, a registered person can claim credit pertaining to an invoice or a debit note for supply of goods and services earlier of:

1. Due Date of furnishing of return under section 39 i.e. GSTR 3B for the month September following the end of the financial year to which such invoice or invoice relating to such debit note pertains (The finance bill 2020 has amended the said section de-linking the debit note to its original invoice, however the same is not yet notified); or

2. Date of filing annual return for the relevant financial year;

While, the above time limit applies in case of forward charge, however, it is not clear if the same applies even in cases of payment made under reverse charge.

On perusal of section 16(4) of the CGST Act, 2017, we know that the time limit for availement of credit is linked to the period to which the invoice or debit note pertains. The said section is reproduced below for ease of reference

(4) A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the due date of furnishing of the return under section 39 for the month of September following the end of financial year to which such invoice or invoice relating to such debit note pertains or furnishing of the relevant annual return, whichever is earlier.

Section 31 of the CGST Act, 2017 read with Rule 46 and 47 of the CGST Rules, provides for the requirement and manner of raising an invoice under GST. 

In case of payment of tax under reverse charge mechanism, section 31 of the CGST Act, 2017, provides that a registered person liable to pay tax under reverse charge is required to issue a self-invoice for receipt of goods and services from unregistered person. Also, a payment voucher is required to be issued at the time of making payment to such unregistered person.

Now, in case of Rule 47 of the CGST Rules, 2017, the self-invoice is required to be issued within 30 days from the date of supply of service. Accordingly, based on the above provision, availement of reverse charge credit is also linked to the self-invoice which is required to be issued in case of reverse charge supplies.

Therefore, the time limit for availing credit as per section 16(4) of the CGST Act, 2017, applies to credit of tax paid under reverse charge as well. However, the primary condition of payment of tax is to be satisfied for claiming credit under reverse charge.

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Discussions to this article

[Ganeshan Kalyani]

Sir, the proviso to section 16(4) provides that for F.Y.2017-18 the input tax credit shall be allowed up to the month of March, 2019 of those invoice the details of which have been uploaded by the supplier in GSTR-1 and populated to the buyer in GSTR-2A. If the proviso specifically says about purchases from a registered person and does not speaks about self invoice then does it mean that the time limit for self invoice is not applicable.

Secondly, if you say that time limit for raising self invoice is 30 days from the date of service then one cannot claim credit based on self invoice raised after the time limit, only for discharging liability.

Your view solicited.