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Microlesson · 5-min read

Special Points: Time Limit, 180-Day Rule, Capital Goods

# Special Points for Availment of ITC

Beyond the seven base conditions, three special rules govern timing, payment and capital goods.

## (A) Maximum Time Limit to Avail ITC

ITC on an invoice or debit note must be availed by the EARLIER of:

  • 30th November following the end of the FY in which invoice/debit note was issued, OR
  • Date of filing of Annual Return for that FY.

> Note: For debit notes, the time limit is linked to the debit note's own date (not the underlying invoice's date) — a debit note has its own life.

Cancellation/Revocation exception: If registration is cancelled and later revoked, ITC can be taken in the GSTR-3B filed within 30 days from the revocation order — even if the normal time limit has expired.

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## (B) Payment to Supplier Within 180 Days

Rule: The recipient must pay the supplier (value + tax) within 180 days from the date of invoice.

If not paid:

  • Credit availed shall be added to output tax liability in GSTR-3B of the period in which 180 days elapses.
  • Interest @ 18% p.a. u/s 50 is payable from the date of utilisation to the date of payment/reversal of credit.
  • ITC can be re-availed when payment is eventually made — and the normal time limit does NOT apply for re-availment.
  • If partial payment is made, reversal is proportionate to the unpaid amount.

Rule does NOT apply to:

  • RCM supplies (recipient is paying tax directly anyway)
  • Deemed supply under Schedule I (no consideration involved)
  • Additions to value paid directly to third parties by recipient

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## (C) GST on Capital Goods

The taxpayer must choose one of the following — not both:

  • Capitalise the tax and claim depreciation under Income Tax Act, OR
  • Take ITC of the tax paid.

Double benefit (capitalise + claim ITC) is prohibited.

Worked example

### Example 1

Example 1 — Time limit for invoice vs debit note

ABC Ltd. issued an invoice to Mr. Pal on 01/02/2024 and raised an additional debit note dated 03/04/2024. Mr. Pal filed annual return for FY 23-24 on 31/12/2024 and for FY 24-25 on 15/10/2025.

  • Invoice (FY 23-24): Time limit = earlier of 30/11/2024 or 31/12/2024 → 30/11/2024.
  • Debit note (FY 24-25): Time limit = earlier of 30/11/2025 or 15/10/2025 → 15/10/2025.

Lesson: Debit note has its own time limit driven by its issue date, not the parent invoice.

### Example 2

Example 2 — RCM self-invoice, late issuance

Sona Ltd. avails legal service from an unregistered lawyer on 05/08/2024. Self-invoice issued late on 15/04/2025. Annual return for FY 25-26 filed in December 2026.

  • Self-invoice falls in FY 25-26 → Time limit = earlier of 30/11/2026 or date of Annual Return (Dec 2026) → 30/11/2026.

Lesson: Late issuance does not change the rule — the invoice date drives the time limit.

### Example 3

Example 3 — 180-day rule (partial payment)

ABC Ltd. avails advertisement service of ₹25 lakh from Karim Ltd. (Invoice 25th March, GST @ 18%). ITC of ₹4,50,000 availed immediately. ABC pays ₹10 lakh in April; nothing more till December.

  • 180 days expire in September → unpaid amount = ₹29,50,000 − ₹10,00,000 = ₹19,50,000
  • ITC to be reversed (tax component on unpaid) = ₹19,50,000 × 18/118 = ₹2,97,458
  • Reverse in September GSTR-3B + pay interest @ 18% p.a. from date of utilisation till reversal.

⚠️ Common exam mistakes

  • Using the invoice date to determine the time limit for ITC on a debit note — debit notes are linked to their own issue date.
  • Forgetting that the time limit for ITC is the EARLIER of 30 November and annual return filing date — not the later.
  • Not reversing ITC when payment to supplier slips past 180 days; or reversing the gross invoice amount instead of just the tax component on the unpaid portion.
  • Both capitalising GST on capital goods AND claiming ITC — only one is permitted.
  • Applying the 180-day rule to RCM supplies — it does not apply there.
Bare-Act text Section 16(2), 16(4) · CGST Act, 2017 · click to expand
Second proviso to Section 16(2): Where a recipient fails to pay the supplier of goods or services or both the amount towards the value of supply along with tax payable thereon within a period of 180 days from the date of issue of invoice, an amount equal to the input tax credit availed by the recipient shall be paid by him along with interest payable under Section 50. Section 16(4): A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the 30th day of November following the end of financial year to which such invoice or debit note pertains or furnishing of the relevant annual return, whichever is earlier.
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