ITC on Debit Notes-Time Limit

[ROHIT GOEL]

Dear Experts,

During recent internal audit of Mr. X, it came to notice that in FY 2021-22, rates on some of his sale items was increased from 12% to 18% however he continued to charge old rate of 12% on sale invoices. GSTR--1, 3B and GSTR-9/9C was filed timely by him and credit passed on at 12% only. Now Mr. X intends to correct this mistake and pay differential tax with interest.

Your opinion is required on following:

1. Whether Mr. X can issue debit note to Customers for differential tax of 6% for FY 21-22 now in April 2023? (I could not find any restriction in section 34 about time limit)

2. If yes, whether customers would be able to take ITC of such debit note as per section 16(4)? (As per 16(4), ITC of a invoice or debit note can be claimed till 30th November of year following the year to which the invoice or debit note relates to. Admittedly, debit note relates to FY 2021-22 but is being issued in April 2023, hence the confusion)

Kindly share your valuable views.

AI Summary

Input tax credit deadline tied to debit note date, permitting ITC until the statutory year end deadline following the debit note.
No statutory time limit prevents issuance of a debit note to recover undercharged tax; entitlement to input tax credit is governed by the date of the debit note, since the post amendment rule delinks the ITC cut off from the original invoice and makes the debit note's financial year cut off (or earlier annual return filing) determinative for claiming ITC.