GST Section 16(4) - New ITC Time Limit Rules 2026
Section 16(4) is the GST rule that sets a strict time limit for claiming Input Tax Credit (ITC) on invoices and debit notes of a financial year. If you miss this time limit, you generally lose that ITC, even if the invoice is genuine and tax was paid.
In 2026, this section remains one of the most important compliance checkpoints because it directly affects cash flow, working capital, and GST scrutiny risk. This guide explains the rule in simple language, with tables and examples, and covers practical steps you can follow in day-to-day accounting.
What is Section 16(4) of the CGST Act?
Section 16(4) says you cannot take ITC for an invoice or debit note after a specific cut off date. This is a legal time bar.
As per the current rule, the last date to claim ITC for a financial year is the earlier of:
- 30th November, after the end of the relevant financial year, OR
- The date you file the annual return for that financial year (GSTR 9)
So if you file GSTR 9 early, your ITC window closes early too.
How Section 16(4) Works
Think of Section 16(4) as a closing gate.
- You can claim ITC in GSTR 3B while the gate is open.
- The gate closes on the earlier of 30th November or the GSTR 9 filing date.
- Once closed, you cannot claim that year’s missed ITC in later months.
Important points you should remember:
| Point | What it means |
|---|---|
| Invoice or debit note wise | The time limit is checked invoice wise and debit note wise |
| Linked to the relevant FY | You track the FY based on invoice or debit note date |
| Claimed through returns | ITC is taken through GSTR 3B within the allowed window |
| Earlier date wins | If GSTR 9 is filed before 30th November, that earlier date becomes the deadline |
Time Limit for Claiming ITC Under Section 16(4)
Core time limit rule (2026)
For any invoice or debit note of a financial year, the last date to claim ITC is the earlier of 30th November of the following FY OR the date of filing the annual return (GSTR 9) for that FY.
Quick time limit table
This table assumes you do not file GSTR 9 before 30th November.
| Invoice or debit note belongs to FY | Normal last date to claim ITC |
|---|---|
| 2023 to 24 | 30 Nov 2024 |
| 2024 to 25 | 30 Nov 2025 |
| 2025 to 26 | 30 Nov 2026 |
How to Identify the Deadline for Claiming ITC
Use this simple method for any invoice.
Step 1: Identify the FY of the invoice or debit note
- Invoice date 10 Feb 2026 belongs to FY 2025 to 26.
Step 2: Find 30th November of the next FY
- For FY 2025 to 26, the cut-off is 30 Nov 2026.
Step 3: Check if GSTR 9 is filed earlier
- If you filed GSTR 9 on 15 Oct 2026, then 15 Oct 2026 becomes your ITC last date.
Decision table
| Situation | Your ITC deadline for that FY |
|---|---|
| You have not filed GSTR 9 yet | 30th November of next FY |
| You filed GSTR 9 before 30th November | GSTR 9 filing date becomes the deadline |
| You filed GSTR 9 after 30th November | 30th November remains the deadline |
Scope and Applicability of Section 16(4)
Section 16(4) applies to ITC relating to:
- Regular purchase invoices for goods or services
- Debit notes
- Any ITC you plan to take for a past financial year in a later return
It matters for:
- Monthly filers and quarterly filers
- Businesses that claim ITC on purchases
- Companies with high vendor count and high invoice volume
How RCM and Unregistered Supplier ITC Work Under Section 16(4)
RCM transactions can create confusion because sometimes the recipient has to issue an invoice.
In cases where the recipient issues an invoice for RCM from an unregistered supplier, the relevant financial year for Section 16(4) is generally taken as the year in which the recipient issued invoice is issued. This is important when businesses discover old RCM liability later and then issue the document and pay GST.
RCM summary table
| Case type | Who issues invoice | FY considered for Section 16(4) | Practical meaning |
|---|---|---|---|
| Normal purchase | Supplier | Supplier invoice FY | Standard rule |
| RCM where recipient must issue invoice | Recipient | Recipient issued invoice FY | Deadline shifts based on recipient invoice |
Practical Example of Time Limit Calculation
Example 1: Normal purchase invoice
- Invoice date: 12 March 2026
- FY: 2025 to 26
- Normal cut off: 30 Nov 2026
If you file GSTR 9 for FY 2025 to 26 on 10 Oct 2026, then 10 Oct 2026 becomes your last date.
So you must claim ITC in GSTR 3B before 10 Oct 2026.
Example 2: Missed ITC discovered late
- Invoice date: 20 Aug 2025
- FY: 2025 to 26
- You forgot to claim on the Aug 2025 return
You can still claim it in any later month return, but only up to the Section 16(4) deadline for FY 2025 to 26. So you must claim before the earlier of 30 Nov 2026 or the GSTR 9 filing date.
Example 3: RCM from unregistered supplier where recipient issues invoice later
- Service received: Feb 2024
- Recipient issues invoice under RCM: May 2025
- Relevant FY for time limit: FY 2025 to 26
- ITC deadline: earlier of 30 Nov 2026 or GSTR 9 filing date for FY 2025 to 26
How to Ensure You Claim ITC Within Time
Many businesses lose ITC not because they do not know the rule, but because they do not have a simple follow up system. Use the below workflow:
Monthly ITC control checklist
| Task | What to check | What to do |
|---|---|---|
| Purchase register completeness | Missing invoices from vendors | Ask vendors or check mail and WhatsApp bills |
| ITC pending list | Invoices not yet claimed | Claim in next return if eligible |
| Ageing review | Older invoices still pending | Prioritise closure and vendor follow-up |
| RCM bucket | RCM tax paid but ITC not claimed | Track payment month and claim month |
Special focus month plan
| Month | Focus |
|---|---|
| April to September | Regular matching and vendor follow up |
| October | Identify all last FY pending invoices and debit notes |
| November | Final closure before time limit ends |
Before filing GSTR 9
Do this 3 step check:
- List all pending invoices and debit notes for that FY
- Ensure eligible ones are claimed in GSTR 3B
- Only then file GSTR 9 if you are confident nothing is left
Consequences of Missing the ITC Deadline
If you miss the Section 16(4) deadline:
- ITC becomes time-barred: You generally cannot claim it later.
- Higher GST outflow in cash: You will pay more output GST in cash because the credit is not available.
- Working capital impact: Businesses with thin margins feel this immediately.
Notice and reversal risk: If you claim time barred ITC wrongly, it can lead to reversal demand with interest and penalty exposure.
Recent Amendments and Updates (2022 to 2026)
This section is important because Section 16(4) has been updated over time, and many people still follow the older September logic.
1) Deadline moved to 30th November
Earlier, the time limit was linked to the September return. It was later changed to a fixed date of 30th November after the end of the financial year, along with the annual return rule.
2) Special relaxations for older years
There was a special relaxation for some older financial years, allowing taxpayers to claim missed ITC up to a specific cutoff date. This is relevant mainly for old disputes and old notices.
3) Rule interaction with cancellation and revocation cases
Where registration was cancelled and later revoked, the law provides an extended window for ITC in certain situations, linked to revocation timelines.
4) 2026 compliance reality
In 2026, the rule is stable in practice. The key is to track the correct FY and to follow the earlier-of-two-dates rule properly.
Best Practices for ITC Compliance
Use these best practices to reduce ITC loss risk.
Best practice checklist:
| Best practice | Why it helps |
|---|---|
| Invoice wise ITC tracker | You can detect missed invoices early |
| Weekly vendor follow up | Ensures invoices reflect properly |
| Separate last FY pending bucket | Prevents missing the deadline |
| Reconcile regularly | Reduces last minute rush |
| Avoid early GSTR 9 filing if ITC pending | Annual return can close your window early |
| Keep RCM register separate | Avoids missing RCM credit after payment |
Key Tables, Visuals, and Tools for Better Understanding Section 16(4)
Simple deadline finder table
| Item | Value to fill |
|---|---|
| Invoice FY | Example 2025 to 26 |
| Standard deadline | 30 Nov 2026 |
| GSTR 9 filing date | Enter actual date |
| Final deadline | Earlier of the two |
Conclusion
GST Section 16(4) is a strict time limit rule for ITC. In 2026, the simple rule you must follow is:
Claim ITC for a financial year by the earlier of 30th November of the next financial year or the date you file GSTR 9 for that year. Moreover, if you build a monthly routine for tracking invoices, matching regularly, and doing a final closure exercise in October and November, you can protect your ITC and reduce GST notice risk.
As a Chartered Accountant with more than 8 years of experience, I have refined my skills in the field and developed a true passion for writing. I specialize in creating insightful content on topics such as GST, income tax, audits, and accounts payable. By focusing on delivering information that is both engaging and informative, I aim to share valuable insights that resonate with readers.
Frequently Asked Questions
-
What is the ITC time limit under GST Section 16(4)?
ITC for a financial year must be claimed by the earlier of 30th November of the next financial year or the date of filing the annual return (GSTR 9) for that year.
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Does filing GSTR 9 early change the ITC deadline?
Yes. If you file GSTR 9 before 30th November, your ITC deadline becomes the GSTR 9 filing date because the earlier date applies.
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Can ITC be claimed after 30th November if the annual return is late?
Usually no. If GSTR 9 is filed after 30th November, the earlier date remains 30th November, so ITC becomes time-barred after that date.
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Does Section 16(4) apply to RCM supplies?
Yes, it can apply. For RCM cases where the recipient issues the invoice, the time limit is generally linked to the financial year in which the recipient issued invoice is issued, and the earlier of 30th November or GSTR 9 filing date applies to that year.
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What happens to ITC if GSTR 2B doesn’t reflect the invoice on time?
If you do not claim eligible ITC within the Section 16(4) deadline, it can become time barred. Practically, you should follow up with suppliers early and monitor pending invoices well before the deadline.