CBIC clarifies Time Limit for Issuance of Invoice for RCM Supplies from Unregistered Persons u/s 16(4) of GST Act and availment of ITC

The Central Board of Indirect Taxes and Customs (CBIC) issued Circular No. 211/5/2024-GST to clarify the time limits for availing Input Tax Credit (ITC) under the Central Goods and Services Tax (CGST) Act, 2017. Specifically, the circular addressed confusion regarding Section 16(4) of the CGST Act concerning supplies received under the reverse charge mechanism (RCM) from unregistered persons. It clarified that the financial year for claiming ITC on such supplies is determined by the year in which the recipient issues the invoice, not the year of supply receipt. This interpretation aims to streamline compliance and reduce litigation. It emphasized that recipients must issue invoices for supplies from unregistered suppliers under RCM, and failure to do so timely may lead to interest payments and penalties. This clarification aims to ensure uniform implementation across all field formations, enhancing clarity and compliance under the CGST Act.