A 2024 amendment offers a second look at certain input tax credit claims from 2017-18 to 2020-21 that failed solely because they were filed late, while leaving fraud and other eligibility disputes untouched.
According to an explainer on The Tax Talk, a major change to the goods and services tax regime has reopened the question of old input tax credit claims that were earlier rejected only because they were filed too late. The issue has long centred on Section 16(4) of the Central Goods and Services Tax Act, which imposed a strict filing deadline, often leading to disputes even where the purchase was genuine, the goods or services were received and the invoice was valid.
The Finance (No. 2) Act, 2024 inserted Section 16(5), creating a narrow route for relief in certain older cases. The Tax Talk says the provision is aimed mainly at claims linked to financial years 2017-18 through 2020-21, but it is not a sweeping amnesty. Taxpayers still have to satisfy the basic conditions for input tax credit, including proper documentation, actual receipt of supplies and compliance with the rest of the statutory framework.
That distinction matters because Section 16(5) addresses only the timing objection. Where the tax department has challenged a claim on broader grounds, such as bogus invoices, non-existent suppliers, fraud or failure to meet the other eligibility requirements, the new provision does not by itself cure the defect. The article argues that taxpayers should first identify the precise reason for rejection before assuming that the amendment resolves the dispute.
Timing is central to the analysis. The relevant date is not simply the financial year in which the invoice arose, but also when the GSTR-3B return was actually filed. A case may become eligible for reconsideration if the only objection was that the credit was claimed after the deadline under Section 16(4), and the claim otherwise meets the requirements introduced by Section 16(5). CBIC Circular No. 237/31/2024-GST, issued in October 2024, was intended to clarify implementation issues arising from the amendment, according to the sources reviewed.
The relief may also matter where proceedings are already under way. The Tax Talk notes that taxpayers who have received notices, adjudication orders or have appeals pending may need to revisit their positions in light of the amended law. But the practical remedy will depend on the stage of the case, and the article cautions that limitation periods for appeals, rectification requests and other procedural steps still need to be watched closely.
The more difficult question is what happens to money already paid or credit already reversed. The article says the new law should not automatically be read as creating a universal right to refund in every old case, pointing to the need to examine Section 150 of the Finance (No. 2) Act, 2024. For tax professionals, the message is to conduct a structured review of legacy disputes from the 2017-18 to 2020-21 period, verify the dates, test whether the denial rested solely on delay and preserve the records needed to support the original claim.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
