Suggestions on GST Acts (July 2017) by Institute of Chartered Accountants of India
44. Invoice not to be older than 12 months for availing credit
Clause (iv) of Section 140(3) of CGST Act, 2017 provides that transitional credit to a registered taxable person covered under Section 140(3) shall, amongst others, be subject to the condition that ““such invoices or other prescribed documents were issued not earlier than twelve months immediately preceding the appointed day;”
Issue
There may arise a situation where stocks (in hand or in process) on the appointed day may contain goods which has been purchased prior to twelve months preceding the appointed day (especially in case of long term contracts/ works contracts wherein the contracts are in progress for more than a year). Disallowance of credit paid on inputs in such cases will result in financial hardship to the taxable person. The provision of deemed credit does not have any such 12 months’ period and therefore may not be harmonious as a whole. However, one who is less diligent would be eligible for deemed credit without any time limit.
Suggestion
It is suggested that the time limit of 12 months be prescribed for purchases made on or after the appointed day and as a one-time transitional measure, there need not be any time limit for availment of credits on the basis of purchase invoices/ documents pertaining to a period prior to 12 months, if all other conditions of allowability are satisfied.
Read ICAI Suggestions on GST Act to Govt : July 2017
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