GST Circular: Conditions and Eligibility for Input Tax Credit (ITC) – Key Updates

GST Updates

On October 15, 2024, the Central Board of Indirect Taxes and Customs (CBIC) issued Circular No. 237/31/2024-GST. This circular provides clarifications regarding the retrospective amendments to Section 16 of the Central Goods and Services Tax (CGST) Act, 2017, which deals with Input Tax Credit (ITC). These amendments, brought in through the Finance (No. 2) Act, 2024, affect provisions relating to the time limit for availing ITC.

Here’s a breakdown of the key points addressed in the circular:

1. Amendments to Section 16 of the CGST Act

The circular references two new subsections, (5) and (6), that have been inserted into Section 16 of the CGST Act with retrospective effect from July 1, 2017. These subsections extend the time limits for claiming ITC in certain cases:

  • Subsection (5): Allows taxpayers to claim ITC for invoices or debit notes related to financial years 2017-18, 2018-19, 2019-20, and 2020-21, in returns filed by November 30, 2021.
  • Subsection (6): In cases where a taxpayer’s GST registration was canceled and later restored, they can claim ITC for invoices issued during the period of cancellation if certain conditions are met.

2. No Refunds for Reversed ITC

In line with Section 150 of the Finance (No. 2) Act, 2024, the circular clarifies that no refunds will be provided for taxes paid or ITC reversed before these amendments were introduced. Taxpayers cannot claim refunds for actions taken before the retrospective amendments.

3. Special Procedure for Rectification

For taxpayers who were denied ITC due to the time limits set out in subsection (4) of Section 16, but are now eligible under the new subsections (5) or (6), a special rectification process has been outlined. These taxpayers can apply for rectification of orders issued under Sections 73, 74, 107, or 108 of the CGST Act.

Key steps include:

  • Filing a rectification application through the GST portal within six months of the notification (dated October 8, 2024).
  • Uploading a proforma detailing the amount of ITC wrongly availed, which is now eligible under the new provisions.

4. Clarifications for Different Scenarios

The circular outlines the actions that both taxpayers and tax authorities must take in various scenarios:

  • No demand notice issued: If no demand notice has been issued, the taxpayer may claim ITC in accordance with the retrospective provisions.
  • Demand notice issued but no order passed: The adjudicating authority must pass an appropriate order considering the new provisions.
  • Appeal filed but not decided: The appellate authority must take the retrospective provisions into account when passing orders.
  • Order passed but no appeal filed: Taxpayers can apply for rectification of such orders using the special procedure.

5. Conclusion

This circular provides much-needed relief for taxpayers who faced denial of ITC due to past restrictions under Section 16(4) of the CGST Act. The new amendments, coupled with the special rectification procedure, ensure that eligible taxpayers can now claim ITC for prior years, even if their registration was canceled during the period of invoice issuance.

The GST portal has been updated to facilitate this rectification process. Taxpayers and tax authorities alike must take prompt action to ensure compliance with the new guidelines.

For detailed instructions on filing rectification requests and more information, you can access the full GST circular from here.


This blog post offers a high-level summary of the key elements of GST Circular No. 237/31/2024-GST. Businesses are encouraged to consult with tax professionals for specific guidance.

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