Creditor writeoff

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This discussion explores whether Input Tax Credit (ITC) needs to be reversed when a creditor write-off is recognised as income in the profit and loss account. The consensus suggests that ITC reversal is only mandatory for actual write-offs, not for provisions or partial write-offs. The timing of the write-off relative to the financial year is also a consideration.

Sabita Sahoo

Sabita Sahoo (Querist)
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30 October 2023 Creditor's writeoff is shown as income in profit and loss account.
Whether the corresponding ITC needs to be reversed as per sec 17(5)(h)

RAJA P M

RAJA P M (Expert)
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30 October 2023 But, how many days after you write off creditors balance...???

Sabita Sahoo

Sabita Sahoo (Querist)
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01 November 2023 for 2018-19 write off during 2020-21

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)
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20 January 2024 Under GST, the requirement to reverse ITC arises only in case of actual write off. No ITC reversal is required where goods have been partially written off and provision to write off is made.

https://nityatax.com/wp-content/uploads/2019/10/ITC-reversal-on-goods-written-off-or-destroyed-–-A-new-pandora-box-under-GST.pdf

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