Date of issuance of debit note

 Date of issuance of debit note to determine the relevant financial year for the purpose of section 16(4)

Section 16(4) was earlier amended (with effect from 01.01.2021) vide the Finance Act, 2020, so as to delink the date of issuance of debit note from the date of issuance of the underlying invoice for purposes of availing ITC.

A doubt arose as to which of the following dates are relevant to determine the ‘financial year’ for the purpose of section 16(4) in terms of the provision as amended:
(a) date of issuance of debit note, or
(b) date of issuance of underlying invoice.

In this regard, Circular No. 160/16/2021 GST dated 20.09.2021 has clarified that with effect from 01.01.2021, in case of debit notes, the date of issuance of debit note (not the date of underlying invoice) shall determine the relevant financial year for the purpose of section 16(4).

Illustration: A debit note dated 07.07.2021 is
issued in respect of the original invoice dated 16.03.2021. As the invoice pertains to F.Y. 2020-21, the relevant financial year for availment of ITC in respect of the said invoice in terms of section 16(4) of the CGST shall be 2020-21. However, as the debit note has been issued in FY 2021-22, the relevant financial year for availment of ITC in respect of the said debit note shall be 2021-22 in terms of amended provision of section 16(4) of the CGST Act.