Section for reversal of ITC

This query is : Resolved

Suresh S. Tejwani (Querist)
Follow

02 December 2025 In case we are making both taxable and exempt supplies, whether the ITC on back-charges is required to be reversed under which Section ?

“If a wrong bill appears in GSTR-2B and ITC has been wrongly availed, whether the ITC is required to be reversed under Section?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
Follow

03 December 2025 Yes — when a registered person makes both taxable and exempt supplies, the Input Tax Credit (ITC) on common inputs/services (including back-charges) must be reversed proportionately under Section 17(2) of the CGST Act, read with Rule 42 of the CGST Rules

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
Follow

03 December 2025 If ITC is wrongly availed due to a wrong bill in GSTR-2B, it must be reversed under Section 16(2) of the CGST Act, since the basic eligibility conditions are not satisfied.
• If already utilized → reversal plus interest under Section 50.
• If only availed but not utilized → reversal required, but interest may not apply (as clarified in CBIC circulars and judicial rulings).

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now