This circular provides clarification regarding the retrospective applicability of sub-sections (5) and (6) of Section 16 of the CGST Act, inserted by the Finance (No. 2) Act, 2024, extending the time limit for availing input tax credit (ITC) for FYs 2017–18 to 2020–21 and in cases of revocation of registration. The amendments allow taxpayers to claim ITC in returns filed up to 30th November 2021 in specific cases, thereby regularizing past ITC claims that were previously time-barred under Section 16(4).

The circular prescribes actions to be taken by taxpayers and tax authorities in various situations—such as cases where no demand notice has been issued, where adjudication or appeals are pending, or where final orders have been passed but no appeal has been filed. Taxpayers whose demands were confirmed for ITC denial under Section 16(4) can apply for rectification of orders under a special procedure (Notification No. 22/2024–CT dated 8th October 2024) within six months, provided appeals have not been filed. Applications are to be made electronically through the GST portal.

It also clarifies that while relief is available for ITC wrongly denied due to Section 16(4), no refund will be granted for taxes already paid or ITC already reversed. The rectification process must follow principles of natural justice and can only apply to issues directly linked to the retrospective ITC entitlement.