Published 12 October 2026
Credit that has not been taken is not lost at once. It can be taken in any later return, but only until a fixed date, and after that it is gone even if every other condition is met. The date is easy to state and easy to misapply. It runs from the year of the document, not of the purchase or the books. It is brought forward by an early annual return. It works differently for a debit note, for a self-invoice, and for credit that was taken and reversed. For the first four years of GST, and for registrations cancelled and later restored, Parliament changed it with retrospective effect in 2024, and set up a procedure for undoing demands raised under the old rule.
This guide covers the procedure. The conditions for credit are in Input Tax Credit: the Conditions in Section 16(2), and the general map of corrections in Correcting Mistakes in Returns.
The rule in section 16(4)
Section 16(4) provides:
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 thirtieth day of November following the end of financial year to which such invoice or debit note pertains or furnishing of the relevant annual return, whichever is earlier.
Three points follow from the words.
- The limit is on taking credit. Credit is taken in GSTR-3B, so the question is the filing date of the GSTR-3B that claims it. A March return filed in December cannot take credit on that year’s invoices, as explained in Late Returns.
- The year is the document’s year. An invoice dated 28 March 2026 belongs to 2025-26, wherever the goods were in transit and whenever the bill was booked. Its limit is 30 November 2026.
- An early annual return closes the window. If the annual return for the year is filed before 30 November, the limit falls on the filing date.
How the date has changed
| Period | Limit | Source |
|---|---|---|
| Up to 30 September 2022 | Due date of the return for September following the year, or annual return if earlier | Section 16(4) as enacted |
| 2017-18 | Extended to the due date of the March 2019 return, for invoices the supplier had uploaded by the due date of its March 2019 GSTR-1 | Proviso to section 16(4), inserted by Order No. 02/2018-Central Tax |
| From 1 October 2022 | 30 November following the year, or annual return if earlier | Finance Act, 2022, in force under Notification No. 18/2022-Central Tax |
| 2017-18 to 2020-21 | Any return filed up to 30 November 2021 | Section 16(5), inserted in 2024 with effect from 1 July 2017 |
For 2020-21 the ordinary limit had been the due date of the September 2021 return. GSTN’s advisory of 17 October 2021 gave it as 20 October 2021 for monthly filers. Section 16(5) moved it to 30 November 2021.
Debit notes
Before 1 January 2021, section 16(4) referred to the year to which the “invoice relating to such debit note” pertained. The Finance Act, 2020 removed those words with effect from that date, by Notification No. 92/2020-Central Tax. Circular No. 160/16/2021-GST clarifies the effect: from 1 January 2021 “the date of issuance of debit note (not the date of underlying invoice) shall determine the relevant financial year”. The amended rule governs any credit taken on or after 1 January 2021, whether the debit note was issued before or after that date. Its illustration takes a debit note of 7 July 2021 on an invoice of 16 March 2021. The invoice belongs to 2020-21, but the debit note belongs to 2021-22, and its own limit applies.
A credit note works the other way. It reduces credit, and the recipient’s action on it is governed by IMS and section 34(2), covered in The Invoice Management System and GSTR-2B.
Self-invoices for reverse charge purchases
Where tax on a purchase from an unregistered person is paid by the recipient under reverse charge, the recipient itself issues the invoice under section 31(3)(f). Circular No. 211/05/2024-GST clarifies that the relevant year for section 16(4) is “the financial year in which the invoice has been issued by the recipient”, subject to payment of the tax and the other conditions. Where the self-invoice is issued late, interest is payable on the late tax, and the circular notes that penal action under section 122 may follow.
Credit taken and reversed earlier
A reclaim is not a fresh claim. Rule 37(4) provides that the section 16(4) limit “shall not apply to a claim for re-availing of any credit, in accordance with the provisions of the Act or the provisions of this Chapter, that had been reversed earlier”. It covers credit reversed for non-payment within 180 days under rule 37, for the supplier’s default under rule 37A, and other temporary reversals in table 4(B)(2), when the condition is later met. The reporting is in Reporting Credit in GSTR-3B Table 4.
Invoices of earlier years that arrive late
A supplier who reports an invoice of an earlier year in a current GSTR-1 puts it in the recipient’s current GSTR-2B. If that is after the recipient’s section 16(4) date for the invoice’s year, GSTR-2B shows it as “ITC Not Available”, and it is reported only in table 4(D)(2). The GSTR-2B FAQs list section 16(4) as one of the two scenarios in which credit is shown as not available. Records kept pending in IMS stay there only until the section 16(4) date. The follow-up with suppliers is described in Reconciling Purchases with GSTR-2B.
Is the limit valid?
The constitutional challenges have failed. In Chief Commissioner of Central Goods and Service Tax v. Safari Retreats Private Limited (Supreme Court, Civil Appeal No. 2948 of 2023, 3 October 2024), the appeals concerned credit on construction of malls let out on rent. Several connected writ petitions also prayed that section 16(4) be read down or not applied. Among the Court’s conclusions in paragraph 65 was that “the challenge to the constitutional validity of clauses © and (d) of Section 17(5) and Section 16(4) of the CGST Act is not established”. The limit is therefore applied as enacted, subject only to the two reliefs below.
Section 16(5): 2017-18 to 2020-21
Section 118 of the Finance (No. 2) Act, 2024 inserted sub-sections (5) and (6) “with effect from the 1st day of July, 2017”. Notification No. 17/2024-Central Tax brought section 118 into force, and Circular No. 237/31/2024-GST of 15 October 2024 records the retrospective effect. Section 16(5) reads:
Notwithstanding anything contained in sub-section (4), in respect of an invoice or debit note for supply of goods or services or both pertaining to the Financial Years 2017-18, 2018-19, 2019-20 and 2020-21, the registered person shall be entitled to take input tax credit in any return under section 39 which is filed up to the thirtieth day of November, 2021.
The relief turns on the filing date of the return in which the credit was taken. Credit for those years taken in a return filed after 30 November 2021 is not saved.
CE MTTCC JV v. Superintendent, CGST and CX, Range-II, Durgapur II Division (Calcutta High Court, WPA 10506 of 2025, 18 June 2025). The GSTR-3B for October 2020, which claimed the credit, was filed on 19 February 2022. The petitioner argued that section 16(5) should be read to extend 2020-21 to 30 November 2022, and alternatively relied on the Supreme Court’s extension of limitation during the pandemic. The Court held that Parliament, “being conscious of the above situation”, had “chosen not to extend the period for filing returns … for the year 2020-21, beyond 30th November, 2021”. The petition was dismissed.
Section 16(6): registrations cancelled and restored
Section 16(6) applies where a registration cancelled under section 29 is revoked, under section 30 or pursuant to an order of the Appellate Authority, Appellate Tribunal or a court. Credit on an invoice or debit note that “was not restricted under sub-section (4) on the date of order of cancellation of registration” may be taken in a return under section 39 filed by the later of two dates:
- 30 November after the year of the document, or the annual return if earlier; or
- for the period from the date of cancellation, or its effective date, until the revocation order, a return “filed within thirty days from the date of order of revocation”.
Credit already barred on the date of the cancellation order is not revived. The conditions, the courts’ reading of them, and the returns that follow a restoration are in When a Cancelled Registration Is Restored.
No refunds for amounts already paid
Section 150 of the Finance (No. 2) Act, 2024 provides that “no refund shall be made of all the tax paid or the input tax credit reversed, which would not have been so paid, or not reversed, had section 118 been in force at all material times”. Circular No. 237/31/2024-GST repeats it. A person who reversed credit or paid a demand before the amendment cannot recover that amount because of sections 16(5) or 16(6).
Where a demand was raised under section 16(4)
Circular No. 237/31/2024-GST sets out what follows, at each stage, where credit was denied under section 16(4) but is now available under section 16(5) or 16(6):
| Stage reached | What the circular directs |
|---|---|
| Investigation begun, or a DRC-01A issued, but no notice under section 73 or 74 | The proper officer “shall take cognizance” of the new sub-sections and act accordingly |
| Notice issued, no order yet | The adjudicating authority takes cognizance and passes the order accordingly |
| Order passed, appeal pending | The Appellate Authority takes cognizance in its order under section 107 |
| Order passed, revision begun under section 108 | The Revisional Authority takes cognizance |
| Order under section 73, 74, 107 or 108 confirmed, and no appeal filed | Application for rectification under the special procedure in Notification No. 22/2024-Central Tax |
The special procedure. Notification No. 22/2024-Central Tax of 8 October 2024 was issued under section 148. It applied to a person against whom an order under section 73, 74, 107 or 108 had confirmed a demand for credit wrongly availed in contravention of section 16(4), where the credit is now available under section 16(5) or 16(6), and “where appeal against the said order has not been filed”. The procedure was:
- The person filed an application for rectification electronically on the portal “within a period of six months from the date of issuance of this notification”.
- With it, the person uploaded the proforma in Annexure A. It sets out the demand confirmed by year and head, the part now eligible under section 16(5), and the part eligible under section 16(6). It contains a declaration that no appeal under section 107 or 112 is pending against the order, and a verification by the authorised signatory.
- The authority that passed the order decides the application, “as far as possible, within a period of three months”. A summary of a rectified order is uploaded in FORM GST DRC-08 for an order under section 73 or 74, and in FORM GST APL-04 for an order under section 107 or 108.
- Rectification is confined to the credit denied under section 16(4) that is now available. Where it adversely affects the person, natural justice is followed.
The circular gives the portal routes. For an order under section 73 or 74: Services > User Services > My Applications, application type “Application for rectification of order”. For an order under section 107 or 108: Services > User Services > View Additional Notices/Orders, the case, then the ORDERS tab and “Initiate Rectification”. The officer also considers any other ground for denial raised in the notice. A rectified order can be appealed under section 107 or 112 within the time those sections allow. An application that does not concern section 16(4) “would be summarily rejected”. Rectification on other grounds lies only under section 161.
The window has closed. Six months from 8 October 2024 ended in April 2025. No notification extending it appears in CBIC’s list of Central Tax notifications up to October 2026. An order confirmed after that, or one for which no application was made in time, falls back on the ordinary routes. Section 161 allows rectification of an error apparent on the record, brought to notice within three months of the order, with no rectification after six months except for clerical or arithmetical errors. Otherwise the route is appeal, or a writ.
Svaksha Distillery Ltd v. Assistant Commissioner of WB State Tax, Barasat Charge (Calcutta High Court, WPA 20176 of 2025, 17 November 2025). The petitioner had deferred credit for 2018-19 and 2019-20 and claimed it in the GSTR-3B for January to March 2021. The credit was denied, and the appeal dismissed on 14 June 2024, partly on section 16(4). After section 16(5) came in, the petitioner applied under the October 2024 notification to rectify the appellate order. On 30 June 2025 the Appellate Authority rejected the application on the ground that the case was “not related to Section 16(4)”, although its own earlier order had relied on that section. The Court set aside the rejection and remanded the application for fresh consideration “in the light of the notification dated October 8, 2024 and Section 16(5)”. It gave liberty to seek refund of amounts recovered meanwhile “in accordance with law”. That liberty sits beside section 150, which bars refunds of tax paid or credit reversed only because the amendment had not yet been made.
What to have ready
| Item | Where it comes from |
|---|---|
| Document date of each invoice, debit note or self-invoice | Books |
| Filing date of each GSTR-3B in which credit was taken | Portal, return filing history |
| Filing date of the annual return for the year | Portal |
| GSTR-2B entries marked “ITC Not Available” | Portal |
| Dates of cancellation, its effective date, and revocation | Portal; the REG orders |
| Any notice or order denying credit under section 16(4), and its stage | Portal, notices and orders |
Consequences
Credit taken after the limit is credit wrongly availed. It is reversed, with interest under section 50(3) once utilised, and is recovered by demand under section 73, 74 or 74A where it is not. The demand procedure is in Notices and Demands, and appeals in Appeals and Pre-deposit.
What can still be put right
- Credit not yet taken, within the limit. It is taken in the next GSTR-3B.
- Credit reversed earlier. It is reclaimed when the condition is met, free of section 16(4) under rule 37(4).
- A restored registration. Credit for the cancelled period is taken in returns filed within thirty days of the revocation order, if it was not barred at cancellation.
- A demand under section 16(4) for 2017-18 to 2020-21 now saved by section 16(5). Any pending proceeding takes account of the amendment under Circular No. 237/31/2024-GST. A confirmed order not under appeal could be rectified under Notification No. 22/2024-Central Tax, but that window closed in April 2025.
The procedure in order
- For each document, find its financial year: the invoice date, the debit note’s own date since 1 January 2021, or the self-invoice date.
- Take the credit in a GSTR-3B filed by 30 November after that year, and before the annual return if that is filed earlier.
- Watch for supplier records of earlier years arriving late, and for IMS records kept pending near 30 November.
- Reclaim reversed credit when its condition is met. Section 16(4) does not apply to a reclaim.
- For 2017-18 to 2020-21, check whether the credit was taken in a return filed by 30 November 2021.
- After a restoration, file the returns for the cancelled period within thirty days of the revocation order.
- Where a demand rests on section 16(4) but sections 16(5) or 16(6) now allow the credit, raise them at whatever stage the proceeding has reached.
The next guide covers rule 37: reversing credit when the supplier has not been paid within 180 days, and taking it back on payment.