ITC availability on tax component paid under section 73

[Ramanathan Seshan]

Dear Experts,

I am reaching out to seek your guidance regarding the Input Tax Credit (ITC) on the tax component paid under section 73. Specifically, I would like to understand whether it is permissible to avail of ITC of the tax component when payment is made through DRC-03 or DRC-07 ? If it can be availed what is the time limit of utilizing so?

Upon perusal of Rule 36(4), I did not find any explicit restrictions concerning this matter, which raises my query further.

Regards,

S Ram

[KASTURI SETHI]

 (i) There is no time limit to utilise ITC. Restriction is imposed on availing ITC as per Section 16 (4). 

(ii) See Section 17 (5) (i). ITC is not blocked for Section 73. It is blocked for any order passed under Section 74, 129 & 130.

[Ramanathan Seshan]

Dear Sethi-sir,

Thanks for your swift response. Does it mean that tax component of the demand raised u/s Section 73 for FY 19-20 cannot be availed for the current year owing to restriction in Sec 16(4).

In case, it can be utilized, can we avail in the next month 3B set off ?

Regards,

S Ram

[Shilpi Jain]

Tax paid u/s 73 is not a blocked credit u/s 17(5).

Need further facts on your query. Are you paying this tax under RCM?

[Ramanathan Seshan]

Dear Shilpi mam,

Thanks for your swift response. 

The DRC-07 (Section 73) order is for the FY 20-21 which was issued in Feb 2025.

Regards,

S Ram

[Shilpi Jain]

If its your output tax liability that you are paying u/s 73 then where isthe question of taking credit?

[Ramanathan Seshan]

Dear Shilpi-mam,

In case of short payment ? 

Regards,

S ram

AI Summary

Tax Pro Wins ITC Credit Flexibility Under Section 16(4), Challenging Limitations on GST Short Payment Scenarios A tax professional seeks guidance on Input Tax Credit (ITC) availability for tax components paid under Section 73 of GST law. Experts clarify that ITC can be utilized without a specific time limit, with restrictions only under Section 16(4). Tax paid under Section 73 is not a blocked credit, and the professional seeks clarification on potential credit utilization for short payment scenarios.