Utilisation of ITC, Goods and Services Tax - GST

[Rajesh Kumar]

Respected sir / madam

If a TP availed ineligible ITC in 2020-21 and then complete ITC had been utilised.

Now, the said TP wants to reverse the said availed ineligible ITC. So, please guide whether he reverse the said ITC through ITC availed in 2022-23.

Is it wrong to reverse the ITC availed earlier with ITC availed later ? Please guide with provisions.

Posts / Replies

[V Rajalakshmi]

According to Sec 49 (4) and Rule 86(2) of CGST, the taxable person can use the balance in the electronic credit ledger towards payment of tax liability arising on account of the reversal of ineligible ITC. Please use DRC 03 to set off the credit instead of directly reversing it in GSTR 3B. Reversals of this kind will also attract interest, which needs to be paid in cash.

[Shilpi Jain]

There is no restriction in using ITC to pay off the earlier wrongly availed and utilized ITC. Interest will have to be paid from the date of utilisation of credit