ITC can’t be availed beyond GSTR-2A/2B: Insertion of New Section 16(2) (aa)

The CBIC has issued Notification No. 39/2021–Central Tax on 21-12-2021 through which Section 16 of CGST Act, 2017 has been amended. A new clause has been inserted in section 16 of CGST Act, 2017 after sub-section (2), clause (a), which reads as:

“(aa) the details of the invoice or debit note referred to in clause (a) has been furnished by the supplier in the statement of outward supplies and such details have been communicated to the recipient of such invoice or debit note in the manner specified under section 37;”.

Explanation – As per Section 16(2) (aa) ITC on invoice or debit note can be availed only when details of such invoice/ debit note have been furnished by the supplier in his outward supplies (GSTR-1) and such details have been communicated to the recipient of such invoice or debit note.

New Conditions for avail input tax credit:

It was been proposed to insert the new clause ‘(aa)’ after clause (a), in section 16(2) of the CGST Act, this provides an additional condition to claim ITC based on GSTR-2A and newly introduced GSTR-2B. All the below mentioned conditions shall be satisfied to avail Input Tax Credit:

1. The recipient is in possession of tax invoice or debit note issued by a supplier;
2. The details of the above-mentioned invoice or debit note have been furnished by the supplier in the statement of outward supplies and such details have been communicated to the recipient in the manner specified under Section 37 of the CGST Act;
3. The recipient has received the goods or services or both;
4. The tax charged in respect of such supply has been actually paid to the Government and
5. The recipient has furnished the return under section 39 of the CGST Act

Effects of Section 16(2) (aa) w.e.f. January 01, 2022 -

• Input Tax Credit cannot be availed beyond GSTR- 2B/2A
• Not relevance of 5% Provisional Credit as the recipient would not be able to take any ITC if the same is not coming in recipient GSTR-2A and/or 2B

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