EXCESS CREDIT REALTED GST REVERSAL
This query is : Resolved
04 September 2025
An excess amount was mistakenly entered in the IGST column and it was auto adjusted against CGST and SGST. Should the amount be reversed from IGST itself or can it be reversed from where it was used?
06 September 2025
Reversal should be made in the ledger from which the credit was actually utilized.
Since the excess IGST credit was used (auto-adjusted) against CGST and SGST, the reversal should ideally be done by debiting CGST and SGST ledgers where the credit was utilized, not by reversing IGST itself.
Why?
The IGST credit was already consumed against the CGST and SGST liabilities, so to correct the excess, you reverse the credit on the CGST and SGST side.
Practical approach:
Debit CGST and SGST ledgers (where the excess credit was adjusted).
Credit IGST ledger to balance out the excess entry.
Documentation:
Maintain proper records of the reversal for audit and compliance.
Since the excess IGST credit was used (auto-adjusted) against CGST and SGST, the reversal should ideally be done by debiting CGST and SGST ledgers where the credit was utilized, not by reversing IGST itself.
Why?
The IGST credit was already consumed against the CGST and SGST liabilities, so to correct the excess, you reverse the credit on the CGST and SGST side.
Practical approach:
Debit CGST and SGST ledgers (where the excess credit was adjusted).
Credit IGST ledger to balance out the excess entry.
Documentation:
Maintain proper records of the reversal for audit and compliance.
06 September 2025
Reversal should be made in the ledger from which the credit was actually utilized.
Since the excess IGST credit was used (auto-adjusted) against CGST and SGST, the reversal should ideally be done by debiting CGST and SGST ledgers where the credit was utilized, not by reversing IGST itself.
Why?
The IGST credit was already consumed against the CGST and SGST liabilities, so to correct the excess, you reverse the credit on the CGST and SGST side.
Practical approach:
Debit CGST and SGST ledgers (where the excess credit was adjusted).
Credit IGST ledger to balance out the excess entry.
Documentation:
Maintain proper records of the reversal for audit and compliance.
Since the excess IGST credit was used (auto-adjusted) against CGST and SGST, the reversal should ideally be done by debiting CGST and SGST ledgers where the credit was utilized, not by reversing IGST itself.
Why?
The IGST credit was already consumed against the CGST and SGST liabilities, so to correct the excess, you reverse the credit on the CGST and SGST side.
Practical approach:
Debit CGST and SGST ledgers (where the excess credit was adjusted).
Credit IGST ledger to balance out the excess entry.
Documentation:
Maintain proper records of the reversal for audit and compliance.
06 September 2025
Reversal should be made in the ledger from which the credit was actually utilized.
Since the excess IGST credit was used (auto-adjusted) against CGST and SGST, the reversal should ideally be done by debiting CGST and SGST ledgers where the credit was utilized, not by reversing IGST itself.
Why?
The IGST credit was already consumed against the CGST and SGST liabilities, so to correct the excess, you reverse the credit on the CGST and SGST side.
Practical approach:
Debit CGST and SGST ledgers (where the excess credit was adjusted).
Credit IGST ledger to balance out the excess entry.
Documentation:
Maintain proper records of the reversal for audit and compliance.
Since the excess IGST credit was used (auto-adjusted) against CGST and SGST, the reversal should ideally be done by debiting CGST and SGST ledgers where the credit was utilized, not by reversing IGST itself.
Why?
The IGST credit was already consumed against the CGST and SGST liabilities, so to correct the excess, you reverse the credit on the CGST and SGST side.
Practical approach:
Debit CGST and SGST ledgers (where the excess credit was adjusted).
Credit IGST ledger to balance out the excess entry.
Documentation:
Maintain proper records of the reversal for audit and compliance.
06 September 2025
Reversal should be made in the ledger from which the credit was actually utilized.
Since the excess IGST credit was used (auto-adjusted) against CGST and SGST, the reversal should ideally be done by debiting CGST and SGST ledgers where the credit was utilized, not by reversing IGST itself.
Why?
The IGST credit was already consumed against the CGST and SGST liabilities, so to correct the excess, you reverse the credit on the CGST and SGST side.
Practical approach:
Debit CGST and SGST ledgers (where the excess credit was adjusted).
Credit IGST ledger to balance out the excess entry.
Documentation:
Maintain proper records of the reversal for audit and compliance.
Since the excess IGST credit was used (auto-adjusted) against CGST and SGST, the reversal should ideally be done by debiting CGST and SGST ledgers where the credit was utilized, not by reversing IGST itself.
Why?
The IGST credit was already consumed against the CGST and SGST liabilities, so to correct the excess, you reverse the credit on the CGST and SGST side.
Practical approach:
Debit CGST and SGST ledgers (where the excess credit was adjusted).
Credit IGST ledger to balance out the excess entry.
Documentation:
Maintain proper records of the reversal for audit and compliance.
06 September 2025
Reversal should be made in the ledger from which the credit was actually utilized.
Since the excess IGST credit was used (auto-adjusted) against CGST and SGST, the reversal should ideally be done by debiting CGST and SGST ledgers where the credit was utilized, not by reversing IGST itself.
Why?
The IGST credit was already consumed against the CGST and SGST liabilities, so to correct the excess, you reverse the credit on the CGST and SGST side.
Practical approach:
Debit CGST and SGST ledgers (where the excess credit was adjusted).
Credit IGST ledger to balance out the excess entry.
Documentation:
Maintain proper records of the reversal for audit and compliance.
Since the excess IGST credit was used (auto-adjusted) against CGST and SGST, the reversal should ideally be done by debiting CGST and SGST ledgers where the credit was utilized, not by reversing IGST itself.
Why?
The IGST credit was already consumed against the CGST and SGST liabilities, so to correct the excess, you reverse the credit on the CGST and SGST side.
Practical approach:
Debit CGST and SGST ledgers (where the excess credit was adjusted).
Credit IGST ledger to balance out the excess entry.
Documentation:
Maintain proper records of the reversal for audit and compliance.
06 September 2025
Reversal should be made in the ledger from which the credit was actually utilized.
Since the excess IGST credit was used (auto-adjusted) against CGST and SGST, the reversal should ideally be done by debiting CGST and SGST ledgers where the credit was utilized, not by reversing IGST itself.
Why?
The IGST credit was already consumed against the CGST and SGST liabilities, so to correct the excess, you reverse the credit on the CGST and SGST side.
Practical approach:
Debit CGST and SGST ledgers (where the excess credit was adjusted).
Credit IGST ledger to balance out the excess entry.
Documentation:
Maintain proper records of the reversal for audit and compliance.
Since the excess IGST credit was used (auto-adjusted) against CGST and SGST, the reversal should ideally be done by debiting CGST and SGST ledgers where the credit was utilized, not by reversing IGST itself.
Why?
The IGST credit was already consumed against the CGST and SGST liabilities, so to correct the excess, you reverse the credit on the CGST and SGST side.
Practical approach:
Debit CGST and SGST ledgers (where the excess credit was adjusted).
Credit IGST ledger to balance out the excess entry.
Documentation:
Maintain proper records of the reversal for audit and compliance.
06 September 2025
Reversal should be made in the ledger from which the credit was actually utilized.
Since the excess IGST credit was used (auto-adjusted) against CGST and SGST, the reversal should ideally be done by debiting CGST and SGST ledgers where the credit was utilized, not by reversing IGST itself.
Why?
The IGST credit was already consumed against the CGST and SGST liabilities, so to correct the excess, you reverse the credit on the CGST and SGST side.
Practical approach:
Debit CGST and SGST ledgers (where the excess credit was adjusted).
Credit IGST ledger to balance out the excess entry.
Documentation:
Maintain proper records of the reversal for audit and compliance.
Since the excess IGST credit was used (auto-adjusted) against CGST and SGST, the reversal should ideally be done by debiting CGST and SGST ledgers where the credit was utilized, not by reversing IGST itself.
Why?
The IGST credit was already consumed against the CGST and SGST liabilities, so to correct the excess, you reverse the credit on the CGST and SGST side.
Practical approach:
Debit CGST and SGST ledgers (where the excess credit was adjusted).
Credit IGST ledger to balance out the excess entry.
Documentation:
Maintain proper records of the reversal for audit and compliance.
08 September 2025
Sir,
have received a GST notice, in which it is said that IGST has been charged more. So I have REVERSE the amount of IGST used from CGST and SGST. So there will be no demand in this, right?
have received a GST notice, in which it is said that IGST has been charged more. So I have REVERSE the amount of IGST used from CGST and SGST. So there will be no demand in this, right?
29 November 2025
The reversal should be done by making the payment against the IGST portion that was wrongly claimed or adjusted.
• File the reversal through DRC-03 or in the next GSTR-3B with proper narration.
• Keep a working paper showing:
• Excess IGST claimed
• How it was auto-utilized
• Reversal entries made in IGST
• Attach this reconciliation to your reply to the notice.
If you’ve reversed the excess IGST utilization from CGST and SGST correctly, no net demand should arise. The notice will be closed once you demonstrate that the reversal neutralizes the excess claim.
• File the reversal through DRC-03 or in the next GSTR-3B with proper narration.
• Keep a working paper showing:
• Excess IGST claimed
• How it was auto-utilized
• Reversal entries made in IGST
• Attach this reconciliation to your reply to the notice.
If you’ve reversed the excess IGST utilization from CGST and SGST correctly, no net demand should arise. The notice will be closed once you demonstrate that the reversal neutralizes the excess claim.
02 December 2025
Thank you Sir ,
But please share with me any decision or notification related to this issue.
But please share with me any decision or notification related to this issue.
02 December 2025
Regarding official guidance, GST Circular No. 192//2023 clarifies that when a taxpayer wrongly avails IGST credit and then reverses it, the interest calculation depends on the total ITC balance (IGST+CGST+SGST) available at the time of reversal. The reversal should be recorded in GSTR-3B under IGST. Also, Section 77 of the CGST/SGST Act confirms that a wrong tax payment can be adjusted by claiming a refund but not by cross-adjustment between IGST and CGST/SGST. Therefore, in this case, a refund claim for the wrong payment is possible, but the proper reversal must be done from IGST itself, ensuring compliance with GST payment and reversal rules.
04 December 2025
sir,
This case is fy 21-22 , is it possible for refund claim.
This case is fy 21-22 , is it possible for refund claim.
04 December 2025
The deadline to rectify errors for FY 2021-22 in GSTR-3B has passed (it was generally up to the furnishing of the return for November 2022). Since the regular amendment window is closed, the recommended approach is to reverse the ITC in your current GSTR-3B and disclose it properly in your annual return (GSTR-9) for that financial year in the relevant tables (e.g., Table 4B).
04 December 2025
sir,
But we already reverse in next month (November 2021) GSTR 3B retun. Basically we take excess ITC in IGST column in october 2021 and ITC auto adjust CGST / SGST liability than we reverse in next month excess ITC from CGST / SGST column.
This reversal officer (officer said this is in not GST law) not accepted so any solution for this problem
But we already reverse in next month (November 2021) GSTR 3B retun. Basically we take excess ITC in IGST column in october 2021 and ITC auto adjust CGST / SGST liability than we reverse in next month excess ITC from CGST / SGST column.
This reversal officer (officer said this is in not GST law) not accepted so any solution for this problem
04 December 2025
He is correct. The reversal should have been from IGST.
05 December 2025
Sir,
Any soution for this case Any Judgment ,Any Notification etc.
Any soution for this case Any Judgment ,Any Notification etc.
05 December 2025
Revenue Neutrality: Many High Courts (e.g., Kerala and Calcutta High Courts) have ruled that such a mistake is revenue-neutral, meaning there is no actual loss of revenue to the government as the Central and State governments still receive their due share of tax. Demanding reversal and re-payment in the correct head with interest/penalty is often deemed unsustainable by the courts.
CBIC Circular No. 192///2023-GST: This circular clarifies that interest is only payable if the total balance of ITC across all heads (IGST + CGST + SGST) was insufficient to cover the wrongly availed amount at any point in time. If your aggregate balance never fell below the excess amount claimed, you are likely not liable for interest. The circular supports the principle that interest should only apply when an actual undue financial benefit is derived.
CBIC Circular No. 192///2023-GST: This circular clarifies that interest is only payable if the total balance of ITC across all heads (IGST + CGST + SGST) was insufficient to cover the wrongly availed amount at any point in time. If your aggregate balance never fell below the excess amount claimed, you are likely not liable for interest. The circular supports the principle that interest should only apply when an actual undue financial benefit is derived.
05 December 2025
Refer to the favorable High Court judgments (e.g., Kerala High Court in M/s Chukkath Krishnan Praveen vs. State of Kerala) and CBIC Circular No. 192//2023-GST as supporting documentation. Emphasize the "revenue-neutral" aspect of your situation.
If the officer is adamant and you want to avoid a prolonged dispute, you could technically pay the disputed amount under the correct head (IGST) through a DRC-03 form and simultaneously apply for a refund of the wrongly paid CGST/SGST amount under the "excess tax paid" or "others" category, citing Section 77 of the CGST Act and relevant circulars.
If the officer is adamant and you want to avoid a prolonged dispute, you could technically pay the disputed amount under the correct head (IGST) through a DRC-03 form and simultaneously apply for a refund of the wrongly paid CGST/SGST amount under the "excess tax paid" or "others" category, citing Section 77 of the CGST Act and relevant circulars.
06 December 2025
Thank you so much SIR.
06 December 2025
You are welcome.
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