Year of Issuance of Invoice under RCM against Supplies by Unregistered Supplier is the relevant Financial Year for Availment of ITC, clarifies GST Council

The GST Council's 53rd meeting issued significant clarifications, notably on invoice issuance by recipients for supplies from unregistered suppliers under the Reverse Charge Mechanism (RCM). The relevant financial year for input tax credit (ITC) under Section 16(4) of the CGST Act is the year the recipient issues the invoice. Key decisions included:\r

- Waiver of Interest and Penalties: Section 128A will allow conditional waivers for FY 2017-18 to 2019-20 if full tax is paid by March 31, 2025.\r

- Monetary Limits for Appeals: Set at Rs. 20 lakhs for GST Appellate Tribunal, Rs. 1 crore for High Court, and Rs. 2 crores for Supreme Court to reduce litigation.\r

- Pre-Deposit Reduction for Appeals: Lowered to ease taxpayers' cash flow.\r

- ENA Taxation: Excludes Extra Neutral Alcohol used in alcoholic liquors from GST.\r

- TCS Rate Reduction: Lowered from 1% to 0.5% for Electronic Commerce Operators.\r

- Appeal Time for GST Appellate Tribunal: Three-month appeal period to start from a notified date.\r

- Relaxations in Section 16(4): Extended ITC availment timelines for FY 2017-18 to 2020-21.\r

- These measures aim to streamline processes, reduce financial burdens, and provide retrospective relaxations to ease compliance.