Time limit for ITC on Debit note

[KARAN VERMA]

Sir

I have made supply and raised Tax invoice dated 5th,Jan. 2019 i.e F.Y 2018-19, now on 03/10/2020, I have to raise debit note against it. ( i.e in F.Y. 2020-21)

In my view, there is no time limit for debit note, therefore I can raise debit note to customer.

Whether customer is eligible to take input credit on such debit note.

[Rajagopalan Ranganathan]

Sir,

As per Section 16 (4) of CGST Act, 2017 "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 [* * *] debit note pertains or furnishing of the relevant annual return, whichever is earlier."

As per Section 18 (2) of CGST Act, 2017 "A registered person shall not be entitled to take input tax credit under sub-section (1) in respect of any supply of goods or services or both to him after the expiry of one year from the date of issue of tax invoice relating to such supply."

In view of the above provisions your customer is eligible to avail ITC on the strength of the debit note issued by you.

[KASTURI SETHI]

I support the views of Sh.Ranganathan, Sir. Reply is perfect.

[KARAN VERMA]

Sir

As per Sec 16(4), they have mentioned the word "invoice relating to such debit note pertains".

Is there any change in this section.

[KASTURI SETHI]

Recent change is de-linking of debit note from invoice. Now debit note will not be each invoice wise. It will be consolidated. Correlation cumulatively will be done. Correlation still exists. This change has not effected time bar limit under Section 16(4) of CGST Act.

[KARAN VERMA]

Sir, if no change in time b-ar limit, it means I m not eligible for credit of debit notes pertain to original invoice issued in 2018-19

[Ganeshan Kalyani]

I agree with the views of both the experts. Sec.16(4) states that after September month following the end of the financial year to which such invoice or debit note pertains, the claim is not allowed. In your case the debit note is raised in current financial year so credit is allowed. However, as correctly stated by Sri Kasturi Sir, it is subject to the limitation of Sec.16(4) that you cannot claim it after September 2021.

[KASTURI SETHI]

Sh.Ganeshan Kalyani Ji,

Thank you very much for clearing the air. You responded quickly also.

[KARAN VERMA]

Great Sir. Thank you.

[Ganeshan Kalyani]

Welcome Sir.

AI Summary

Input tax credit time-bar: debit notes permit ITC only if the statutory filing and one year limits are met.
Claiming input tax credit on a debit note is permitted where the debit note relates to an earlier supply, but entitlement is subject to the time limits in the CGST Act: Section 16(4) bars ITC after the due date for filing the return for September following the end of the relevant financial year or after filing the annual return, whichever is earlier, and Section 18(2) imposes a one year limitation from the date of issue of the tax invoice. Consolidation of debit notes does not alter these limits.