Understanding Section 16(5) of the CGST Act, 2017
Section 16(5) of the CGST Act, 2017 has been implemented for availment of GST Credit for FYs 2017-18 to 2020-21
Important Points to Remember
- Section 16(5) has been inserted retrospectively with effect from 01.07.2017 to give relief to tax payers whose ITC was time barred due to time limit imposed on section 16(4). To comprehend Section 16(5), we should first understand Section 16(4).
- Earlier section 16(4) of CGST Act, 2017 stated that 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 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 debit note pertains or furnishing of the relevant annual return, whichever is earlier.
- Whereas, Section 16(5) of CGST Act, 2017 states that, notwithstanding anything contained in sub-section (4), in respect of an invoice or debit note for supply of goods or services or both pertaining to the Financial Years 2017-18, 2018-19, 2019-20 and 2020-21, the registered person shall be entitled to take input tax credit in return under section 39 which is filed up to the 30th of November, 2021.
- Therefore, now as per section 16(5) if ITC was claimed up to 30th of November will be considered as eligible ITC. Tax authorities and/or taxpayers may take the following actions in different scenarios to benefit from the retrospectively inserted provisions of sub-section (5) of Section 16 of the CGST Act;
The Taxpayer shall consider sub-section 16(5)
When an order under Section 73 or Section 74 or Section 107 or Section 108 of the CGST Act has been issued for wrong availment of ITC, but is now available as per Section 16(5) & no appeal has been filed by taxpayer, the concerned taxpayer may apply for rectification of the order under section 148 of the CGST Act notified vide Notification No. 22/2024
The proper officer shall consider sub-section 16(5)
The Adjudicating Authority shall consider sub-section 16 (5)
The Appellate Authority shall consider sub-section 16(5)
The Revisional Authority shall consider sub-section 16(5)
Now let’s understand how to file rectification application
Application for rectification of an order issued under section 73 or section 74
Application for rectification of an order issued under section 107 or 108 of is to be filed
Click Dashboard > Services > User Services > View Additional Notices/Orders, Click the View hyperlink to go to the Case Details screen of the issued Notice/Order.
For Section 107 -The APPLICATIONS tab is selected by default. Select the ORDERS tab and click the “Initiate Rectification” link.
For Section 108 – The NOTICES tab is selected by default. To submit Rectification Request against the Revision Order issued to you by the Revisional Authority, select the ORDERS tab and click the “Initiate Rectification” link.
While filing such application for rectification of order, the taxpayer shall upload along with the application for rectification of order, the information in the proforma in Annexure A of the said notification, containing inter-alia the details of the demand confirmed in the said order of the input tax credit wrongly availed on account of contravention of sub-section (4) of section 16 of the CGST Act, which is now eligible as per sub-section (5) and/or sub-section (6) of section 16 of the CGST Act.
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The information contained herein is in summary form and is prepared based on the provisions of GST and allied laws and related Rules, Circulars, Notifications therein. For details, please refer the relevant provisions. While the information is believed to be accurate to the best of our knowledge, we do not make any representations or warranties, express or implied, as to the accuracy or completeness of this information. Reader should conduct and rely upon their own examination and analysis and are advised to seek their own professional advice. We accept no responsibility for any errors it may contain, whether caused by negligence or otherwise or for any loss, howsoever caused or sustained, by the person who relies upon it.
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