Clarification on time limit under Section 16(4) of HGST Act, 2017 in respect of RCM supplies received from unregistered persons

Reverse charge input tax credit timing: ITC tied to the financial year of recipient-issued invoice, subject to tax payment and conditions.

Where a registered recipient must self-issue an invoice and pay tax in cash under the reverse charge mechanism for supplies from unregistered persons, the relevant financial year for the time limit to avail input tax credit is the financial year in which the recipient issues that invoice, provided tax is paid and other statutory conditions for ITC are fulfilled; delayed issuance and delayed tax payment attract interest and may attract penal consequences.