Section 16(4), 16(5) and 16(6), the time limit for input tax credit, year by year

What the provision says now

Section 16(4) is a condition on taking credit, separate from the conditions in Section 16(2) on being entitled to it. As it has read since 1 October 2022, a registered person cannot take input tax credit on an invoice or debit note after 30 November following the end of the financial year to which the document pertains, or after furnishing the annual return for that year, whichever is earlier.

Two things follow directly from that wording, and most errors come from missing one of them:

• The test is the date the credit is taken, which in practice is the date the GSTR-3B carrying the credit is filed. The tax period of that return does not matter. A return for March filed on 5 December is filed after 30 November.
• The annual return can bring the date forward. A person who files GSTR-9 for the year in September cannot take any further credit for that year in October or November, because the annual-return limb is the earlier of the two.

The limit, year by year

The provision has been amended twice and supplemented once with retrospective effect. The table gives the position as it now stands for each year, not as it stood when the year closed.

For FY 2017-18 to 2020-21, Section 16(5) states the rule without the annual-return limb: credit may be taken in any return under Section 39 filed up to 30 November 2021. An annual return filed before that date does not cut the period short for those years.

A debit note carries its own year

Until 31 December 2020 the provision tied a debit note to the year of the invoice relating to it, which meant a price revision raised late could never carry credit. Section 120 of the Finance Act, 2020 removed those words with effect from 1 January 2021. From that date the debit note's own date fixes the financial year. Circular No. 160/16/2021-GST confirms that the amended rule applies to credit taken on or after 01.01.2021, whether the debit note was issued before or after that date.

So a debit note issued in May 2025 against an invoice of January 2024 is a FY 2025-26 document, with a last date of 30 November 2026.

Section 16(5), the retrospective rescue of the first four years

The early years produced a large number of demands for credit taken a few weeks late, often because returns were filed late while the portal and the law were both settling. On the recommendation of the 53rd GST Council, section 118 of the Finance (No. 2) Act, 2024 inserted Section 16(5) with retrospective effect from 1 July 2017. Notification No. 17/2024-Central Tax brought it into force on 27 September 2024.

The consequence for pending work is straightforward: for any invoice or debit note of FY 2017-18 to 2020-21, credit taken in a return filed up to 30.11.2021 is within time. A demand raised only because such credit was taken after the original September deadline no longer has a legal basis.

Section 150 of the same Act closes the other door: no refund is payable of tax paid or credit reversed that would not have been paid or reversed had Section 16(5) been in force throughout. A taxpayer who reversed credit or paid a demand earlier cannot now claim it back on the strength of Section 16(5).

Section 16(6), credit after a registration is revoked

Section 16(6) deals with a different situation: a registration cancelled under Section 29 and later revoked, whether by the officer under Section 30 or following an order of an appellate authority, the Tribunal or a court. If the credit was not already barred under Section 16(4) on the date of the cancellation order, it may be taken in a return filed:

• up to 30 November following the end of the financial year to which the document pertains, or
• for the period from the date (or effective date) of cancellation to the date of the revocation order, in a return filed within thirty days of the revocation order,

whichever is later. This matters most where a registration was cancelled retrospectively and the returns for the gap could only be filed after revocation.

Orders already passed

Circular No. 237/31/2024-GST dated 15 October 2024 (corrected by a corrigendum of 25 October 2024) explains how pending notices, appeals and orders are to be dealt with after Sections 16(5) and 16(6) came in.

For an order under Section 73, 74, 107 or 108 confirming a demand only because of Section 16(4), where the credit is now available under Section 16(5) or 16(6) and no appeal had been filed, Notification No. 22/2024-Central Tax dated 08.10.2024 created a special rectification procedure under Section 148. The application had to be filed within six months of that notification, and the officer is to decide it within three months. That window has closed. For orders where it was missed, the remaining routes are the ordinary ones, and whether any remains open depends on the facts and the limitation for that route.

Is Section 16(4) itself valid?

The Patna High Court upheld the constitutional validity of Section 16(4) in Gobinda Construction v. Union of India (2023), holding that credit is a statutory entitlement available on the statute's conditions and that the time limit is one of them. The Supreme Court issued notice in a special leave petition against that judgment in January 2024. For FY 2017-18 to 2020-21 the question has lost most of its practical weight because of Section 16(5); for later years the provision applies as enacted unless the Supreme Court holds otherwise.

For the working paper

When examining a claim (officer):

• Take the document date from GSTR-2B or the purchase register, not the return period. For a debit note, use its own date from 01.01.2021.
• Take the filing date of the GSTR-3B from the return's filing details. Late-filed returns are where the problem sits.
• Check whether the annual return for the year was filed before 30 November; if it was, that date is the limit.
• For FY 2017-18 to 2020-21, apply Section 16(5) and the 30.11.2021 limit, and do not add the annual-return limb.
• Where registration was cancelled and revoked, test Section 16(6) before treating the credit as barred.

When preparing a return (practitioner):

• Credit that is missed in the returns for the year can still be taken in a return filed by 30 November, provided the annual return has not been filed first. File GSTR-9 only after the last credit for the year is in.
• A GSTR-3B filed late for an earlier month does not buy extra time; the filing date is what counts.

The ITC time-limit calculator applies these rules to a single document, and desktop check 9 tests every document in the loaded returns.