As per rules 38,42 & 43 of CGST Rules and section 17(5)
This query is : Resolved
07 March 2025
Can I take it again on a favorable return after filling of Ineligible ITC ?
12 August 2025
Regarding your query on taking ITC again on a favorable return after filing ineligible ITC reversal, here's a detailed explanation based on CGST Rules 38, 42, 43 and Section 17(5):
1. Section 17(5) of CGST Act, 2017
Lists ineligible ITC which cannot be claimed under any circumstances. Examples include motor vehicles (except when used for specified purposes), goods/services used for personal consumption, etc.
Once ITC is reversed because it falls under section 17(5), you cannot claim the same ITC again.
2. Rule 38, 42, 43 of CGST Rules
Rule 38: Deals with reversal of ITC related to input services.
Rule 42: Provides mechanism for reversal of ITC on inputs (like stock or capital goods) used partly for exempt supplies.
Rule 43: Details ITC reversal related to capital goods used partly for exempt supplies.
In essence, these rules require you to reverse the proportionate ITC which is not eligible due to usage in exempt/non-business activities.
Your Question: Can you take ITC again on a later favorable return after reversing ineligible ITC?
If ITC was genuinely ineligible and reversed, you cannot claim the same ITC again in subsequent returns.
However, if the earlier reversal was due to an error or wrong classification, and you later identify that the ITC is actually eligible, you may correct the reversal by adjusting subsequent returns:
For example, if you reversed ITC in Return 1 wrongly, then in Return 2 you can reclaim ITC by adjusting Table 4(D)(2) "ITC reclaimed".
But for ITC disallowed under Section 17(5) (strictly ineligible), no re-claim is allowed.
1. Section 17(5) of CGST Act, 2017
Lists ineligible ITC which cannot be claimed under any circumstances. Examples include motor vehicles (except when used for specified purposes), goods/services used for personal consumption, etc.
Once ITC is reversed because it falls under section 17(5), you cannot claim the same ITC again.
2. Rule 38, 42, 43 of CGST Rules
Rule 38: Deals with reversal of ITC related to input services.
Rule 42: Provides mechanism for reversal of ITC on inputs (like stock or capital goods) used partly for exempt supplies.
Rule 43: Details ITC reversal related to capital goods used partly for exempt supplies.
In essence, these rules require you to reverse the proportionate ITC which is not eligible due to usage in exempt/non-business activities.
Your Question: Can you take ITC again on a later favorable return after reversing ineligible ITC?
If ITC was genuinely ineligible and reversed, you cannot claim the same ITC again in subsequent returns.
However, if the earlier reversal was due to an error or wrong classification, and you later identify that the ITC is actually eligible, you may correct the reversal by adjusting subsequent returns:
For example, if you reversed ITC in Return 1 wrongly, then in Return 2 you can reclaim ITC by adjusting Table 4(D)(2) "ITC reclaimed".
But for ITC disallowed under Section 17(5) (strictly ineligible), no re-claim is allowed.
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