Section 16 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 16(4) puts a hard stop on claiming credit, and many notices were raised on it. Two sub-sections inserted by the Finance (No. 2) Act, 2024, with retrospective effect from 1 July 2017, soften that stop in two situations: invoices of the first four years of GST, and registrations that were cancelled and later revived.
Section 16(5) lets you take ITC on invoices and debit notes for FY 2017-18, 2018-19, 2019-20 and 2020-21 in any return filed up to 30 November 2021. Section 16(6) lets a person whose cancelled registration is revoked take credit, if it was not already barred by section 16(4) on the date of the cancellation order, in a return filed by the later of the two windows the sub-section sets out. Both were notified through Notification No. 17/2024-CT dated 27.09.2024, and Circular No. 237/31/2024-GST dated 15.10.2024 tells officers how to apply them.
Section 16(5): the 2017-21 extension
Section 16(5) begins with a non-obstante: "notwithstanding anything contained in sub-section (4)". For any invoice or debit note pertaining to FY 2017-18, 2018-19, 2019-20 and 2020-21, the registered person is entitled to take ITC in any return under section 39 filed up to the 30th day of November 2021.
The effect is retrospective. A demand that said credit was lost under section 16(4) for those years, because the return was filed after the old September cut-off, now has to be tested against 30 November 2021. The other conditions of section 16 still apply. The sub-section relaxes the time limit and nothing else. If such a demand is already on your desk, a GST notices and litigation review can check each invoice against the relief.
Section 16(6): credit after revocation of cancellation
Cancellation under section 29 normally cuts off credit. The Background Material notes that after the Finance (No. 2) Act, 2024, cancellation does not always mean a permanent loss.
Section 16(6) applies where:
- registration was cancelled under section 29;
- the cancellation was later revoked, under section 30 or by an order of the Appellate Authority, Appellate Tribunal or a court; and
- availment of credit on the invoice or debit note was not restricted under section 16(4) on the date of the cancellation order.
In that case the person is entitled to take the credit in a return under section 39:
- (i) filed up to 30 November following the financial year to which the invoice or debit note pertains, or furnishing of the relevant annual return, whichever is earlier; or
- (ii) for the period from the date (or effective date) of cancellation till the date of the revocation order, where that return is filed within thirty days from the date of the revocation order,
whichever is later.
A worked example
This is an illustration. A supplier invoice is dated 10 September 2024 and belongs to FY 2024-25, so the section 16(4) date is 30 November 2025. Your registration is cancelled by an order dated 5 October 2025, effective from that day. At that date, credit on the invoice is not yet barred. Revocation is ordered on 10 December 2025.
| Window | Date | Result |
|---|---|---|
| Limb (i) | 30 November 2025 | Already over when the revocation order is passed |
| Limb (ii) | 30 days from 10 December 2025, that is 9 January 2026 | Return for the cancellation-to-revocation period filed by this date can include the credit |
| Whichever is later | 9 January 2026 | The credit can be taken in that return |
Now change one fact. If the cancellation order had been passed on 15 December 2025, credit on this invoice would already have been restricted by section 16(4) on that date, and section 16(6) would not help.
The commentary makes the practical point that the real risk is not cancellation alone but failing to secure revocation in time and failing to file the pending returns inside the window. It adds that in any merger, business transfer or restructuring, continuity of registration and timely return filing should be treated as conditions of the deal.
What Circular 237/31/2024-GST says
The circular sets out what officers must do at each stage of a case that turned on section 16(4). The Background Material summarises it like this:
| Stage of the case | What the circular directs |
|---|---|
| No notice or statement issued yet (even if DRC-01A issued) | Officers take cognizance of section 16(5) and 16(6); eligible taxpayers should not face denial |
| Notice under section 73 or 74 issued, no final order | Orders to be passed factoring in the retrospective entitlement |
| Adjudication order under appeal, not decided | Appellate Authority takes cognizance and passes order under section 107 |
| Revision under section 108 started, no final order | Revisional Authority takes cognizance |
| Final order confirming the denial, no appeal filed | Apply for rectification under the special procedure in section 148, notified by Notification No. 22/2024-CT dated 08.10.2024, within six months of that notification |
The last row has lapsed by its own terms. The window of six months ran from the notification of 8 October 2024, so an order passed earlier and never appealed cannot now use that route. If a demand of this kind is open or appealable, it is worth checking these provisions against the facts. A GST notices and litigation team can test whether a pending order can use the new sub-sections.
Related points from the source
- Suspension. The material takes the view that credit is not admissible on inward supplies during suspension, because the person is presumed to have stopped business. It says credit must be allowed where cancellation is restored in appeal.
- Section 16(4) disputes generally. Whether a belated return filed with late fee cures the delay is still argued. See the time limit under section 16(4).
- Cancellation reversal. Section 29(5) may also require payment on stock held on the day before cancellation, so revocation and reversal need to be looked at together.
Need help with an ITC demand under section 16(4)?
If you have received a notice or an order that denies credit on the ground of delay, the first task is to see whether section 16(5) or 16(6) covers the invoices. We can review the notice, map each invoice to the relief and draft the reply through our GST notices and litigation service. Where an order is already passed, we can also look at the appeal route.
Key takeaways
- Section 16(5) extends the claim date to 30 November 2021 for FY 2017-18 to 2020-21.
- Section 16(6) applies only if credit was not already barred by section 16(4) on the date of the cancellation order.
- The return window under 16(6) is the later of limb (i) and limb (ii).
- Both provisions are retrospective from 1 July 2017 and other section 16 conditions still apply.
- Circular 237/31/2024-GST covers cases at notice, appeal, revision and final-order stages.
- The special rectification window under section 148 has closed by its terms.
Read next
- Sections 16(5) and 16(6): the retrospective ITC relief
- Section 16(4) time limit and the retrospective section 16(5) rulings
- ITC time limit: the 30 November deadline
- Rule 36(4): ITC only as per GSTR-2B
Disclaimer: Positions stated as on 30 September 2026, based on the CGST and IGST Acts and Rules as amended, the Finance Act 2026, and the ICAI Background Material on GST (14th Edition, July 2026). Verify current notifications before acting.