Input tax credit is not available indefinitely. Section 16(4) of the CGST Act sets an outer limit for taking credit for the first time on an invoice or debit note. For invoices of FY 2025-26, that limit falls on 30 November 2026. After it, the credit is lost.
The rule
Credit on an invoice or debit note of a financial year cannot be taken after the earlier of two dates: 30 November following the end of that financial year, and the date on which the annual return for that year is furnished. For FY 2025-26, the first date is 30 November 2026. A business that files its annual return for FY 2025-26 earlier than that closes the window earlier.
What stands outside the limit
The limit applies to credit taken for the first time. Under Rule 37(4) of the CGST Rules, it does not apply to re-availing credit that was reversed earlier, for example credit reversed because the supplier was not paid within the period the rules allow and re-claimed on payment. Such credit is tracked separately from the first-time claims in the working.
Credit must also be in GSTR-2B
Credit can be taken only where the invoice has been communicated to the recipient, which in practice means it appears in the auto-drafted statement GSTR-2B. An invoice that is in the books and not in GSTR-2B cannot be claimed until the supplier reports it. This is why the deadline is also a deadline for chasing suppliers.
Supplier default and reversal
Rule 37A deals with credit on invoices where the supplier has not filed GSTR-3B for the period. If the supplier has not filed by 30 September following the end of the financial year, the recipient reverses the credit by 30 November, with interest if it is not reversed in time; once the supplier files, the credit can be reclaimed. The routine below includes a check of supplier filing status for this reason.
A four-week clearing routine
- Week 1. Build a list of all FY 2025-26 purchase invoices and debit notes on which credit has not yet been taken. Match them to GSTR-2B for each month.
- Week 2. For invoices not in GSTR-2B, write to the supplier with the invoice details and ask for it to be reported in the correct return. Note the date of each request.
- Week 3. Decide on each remaining item: claim now, reject on the portal if it is not yours, or accept the loss and book it as a cost. Check that the credit is not blocked and that payments to suppliers are within the period the rules allow.
- Week 4. Take the credit in the return for the month that falls before 30 November, and file the annual return only after the list is cleared.
Before the annual return
Because the annual return can itself close the window, finish the first-time claims before filing it. Then reconcile the annual return to the audited accounts. See the reconciliation checklist.
The rules and the portal’s treatment of returns are amended by notification. Check the CBIC site and the GST portal for the current text before relying on a date, and watch the regulatory updates, including any decisions of the GST Council.
Records to keep ready
- List of FY 2025-26 invoices and debit notes with credit not yet taken
- GSTR-2B for each month, and records of supplier follow-up
- Reversal and re-claim working for credit reversed earlier
- Proof of payment to suppliers