ITC of RCM on supplies from unregistered persons

[Sooraj B]

Can ITC be availed of GST paid under RCM on supplies received from unregistered persons during 23-24, but paid in Dec-24 along with GSTR-3B? The time limit for raising a self invoice was introduced only from November 2024. So can we contend that since the service was received before November 2024 and the payment for the services was also made before November 2024, the rule regarding time limit for raising a self invoice is not applicable in this case and accordingly, the date of self invoice (raised in December 2024) shall be the invoice date for the purpose of ITC ? (applying the provisions of Section 14 of the CGST Act and the clarification issued in Circular 211)

[Rajagopalan Ranganathan]

Sir,

According to rule 47 A pf CGST Rules, 2017, "Notwithstanding anything contained in rule 47, where an invoice referred to in rule 46 is required to be issued under clause (f) of sub-section (3) of section 31 by a registered person, who is liable to pay tax under sub-section (3) or sub-section (4) of section 9, he shall issue the said invoice within a period of thirty days from the date of receipt of the said supply of goods or services, or both, as the case may be." This rule was introduced with effect from 01.11.2024. This rule is effective prospectively.  In my opinion the Department will not accept your argument that since the service was received before November 2024 and the payment for the services was also made before November 2024, the rule regarding time limit for raising a self-invoice is not applicable in your case.  The Department will take the date of issue of invoice as authority to avail ITC.

[KASTURI SETHI]

(i) Section 14 is not applicable here.

(ii) I support the views of Sh.Ranganathan, Sir.

[Shilpi Jain]

Even after the time limit for issuing the self-invoice has been issued, in my view still late issuance of self-invoice will not affect the clarification that the time limit for claiming ITC in case of self- invoice starts from date of self invoice only.

You can claim credit in the present case.

[Yash Shah]

 According to Section 16(4) of CGST Act, No ITC in respect of any invoice or debit note shall be claimed after earlier of:

1. 30th November following end of financial year to which such invoice or debit note pertains; or
2. furnishing of the relevant annual return

As per section 31(3)(f) read with rule 47A, a registered person who is liable to pay tax u/s 9(3) or 9(4) shall within 30 days from receipt of goods or services, issue an invoice in respect of goods or services or both received by him from the unregistered supplier.

Section 13(3):- TOS of services in case of supplies under RCM shall be earlier of following:

1. Date of payment entered in BOA of recipient or date of payment debited in his bank account, whichever is earlier; or
2. Date immediately following 60th day from date of issue of invoice or any other documents, by whatever name called, in lieu thereof by the supplier, in cases where invoice is required to be issued by the supplier; or
3. Date of issue of invoice by the recipient, in cases where invoice is to be issued by the recipient

As per Circular No. 211/5/2024-GST, in case supplies received from unregistered supplier, where tax has to be paid by recipient under RCM and invoice need to issue by recipient u/s 31(3)(f) of CGST Act then relevant financial year for calculation of time limit for availment of ITC u/s 16(4) of CGST Act will be the financial year in which the invoice has been issued by the recipientu/s 31(3)(f) of CGST Act, subject to fulfilment of other conditions and restrictions of section 16 & 17 of CGST Act.

Further the said circular says that in case, the recipient issues the invoice after the TOS of the said supply and pays tax accordingly, he will be required to pay interest on such delayed payment of tax. Further, in cases of such delayed issuance of invoice by the recipient, he may also be liable to penal action under the provisions of Section 122 of CGST Act.

In the given case, TOS of services shall be payment date (payment entered in BOA or debited in bank account whichever is earlier) which is before Nov 24 and invoice is raised in Dec 24 by recipient. Therefore, as per circular relevant financial year for calculation of time limit for availment of ITC u/s 16(4) of CGST Act will be the FY 2024-25 and hence ITC can be claimed.

Further as per circular, since invoice is issued after TOS, therefore recipient of supplies required to pay interest on delayed payment and penalty u/s 122 may also be liable. (NOTE:- circulars are binding only to tax officers)

Since section 14 of CGST Act deals with TOS in case change in tax rates therefore in given case provisions of section 14 will not apply.

[Sooraj B]

Thank you all for your valuable views on the matter .

Regards,

Sooraj

AI Summary

Time limit for ITC: self-invoice date governs ITC year for RCM supplies; late issuance may attract interest and penalty Time of supply for RCM services is the earlier of payment date or other prescribed events; a prospectively introduced rule requires recipients who pay tax under RCM to issue a self invoice within thirty days of receipt. A revenue circular states the financial year for ITC time bar is the year in which the recipient issues the self invoice, subject to section based conditions, and warns that issuing the invoice after time of supply can trigger interest on delayed tax and potential penalty exposure.