Ineligible ITC of prev years reclaimed in this year i.e. FY 2024-25 but failed to reverse same
This query is : Resolved
22 January 2025
Dear sir/s,
Ineligible ITC of previous years re-claimed in this year i.e. FY 2024-25 but failed to reverse same, it is showing at dashboard can we reverse with Dec-2024 GSTR3B return, please guide me.......
Ineligible ITC of previous years re-claimed in this year i.e. FY 2024-25 but failed to reverse same, it is showing at dashboard can we reverse with Dec-2024 GSTR3B return, please guide me.......
12 August 2025
Yes, you can and should reverse the ineligible ITC in the GSTR-3B return for December 2024, if it was wrongly reclaimed and is now appearing on your GST dashboard.
✅ Here's What You Should Do:
1. Reverse the ITC in GSTR-3B:
File the reversal of ineligible ITC in Table 4(B)(2) of GSTR-3B for December 2024, using the December 2024 return due in January 2025.
📌 Table 4(B)(2): "ITC reversed – Any other reversal (specify)"
Mention the reversal amount and add a note in your working paper that it's due to ineligible ITC claimed from prior years.
💸 2. Pay Interest:
Since this is an incorrect availment of ITC, interest under Section 50(3) of the CGST Act is applicable at 24% p.a. on the wrongly availed ITC from the date of availment to the date of reversal.
Use Form DRC-03 to pay interest voluntarily if you wish to avoid future notices.
🧾 3. Documentation:
Maintain a reconciliation statement or working note explaining:
Year of original ineligible ITC
Date and return in which wrongly reclaimed
Month of reversal
Interest calculation
This will help during GST audits or assessments.
🛑 Important:
Don’t delay the reversal beyond December 2024 return — further delay increases interest and risk of notices.
If ITC was also utilized, ensure that your cash balance is sufficient to offset the liability when you reverse.
✅ Here's What You Should Do:
1. Reverse the ITC in GSTR-3B:
File the reversal of ineligible ITC in Table 4(B)(2) of GSTR-3B for December 2024, using the December 2024 return due in January 2025.
📌 Table 4(B)(2): "ITC reversed – Any other reversal (specify)"
Mention the reversal amount and add a note in your working paper that it's due to ineligible ITC claimed from prior years.
💸 2. Pay Interest:
Since this is an incorrect availment of ITC, interest under Section 50(3) of the CGST Act is applicable at 24% p.a. on the wrongly availed ITC from the date of availment to the date of reversal.
Use Form DRC-03 to pay interest voluntarily if you wish to avoid future notices.
🧾 3. Documentation:
Maintain a reconciliation statement or working note explaining:
Year of original ineligible ITC
Date and return in which wrongly reclaimed
Month of reversal
Interest calculation
This will help during GST audits or assessments.
🛑 Important:
Don’t delay the reversal beyond December 2024 return — further delay increases interest and risk of notices.
If ITC was also utilized, ensure that your cash balance is sufficient to offset the liability when you reverse.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- CAPITAL GAIN REDEVELOPED FLAT
- Multiple payment of self assessment tax for A Y 2025-2026
- REGARDING ITR FILING QUESTION
- Requirement under FEMA &RBI
- DUE DATE FOR ITR FILING
- ITC BENEFIT ON BROKRAGE PAID
- Correction in TDS return New Traces Portal
- Sale of Mutual Funds In Diffirent Financial Years
- Gst reverse charge mechanism to be claimed in the month of payment
- TDS NOT YET CREDIED
- GST REGISTRATION REQUIRED TO DIAGNOSTIC UNIT
- Concept of Vendor and customner reconciliation
- Mistake in e-invoice identified after 24 hours
- EXPORT PAYMENT
- NRI ITR2 account in 2025-26.
- Query regarding reporting of exempt foreign remuneration in ITR (AY 2026-27)
- FEMA/RBI treatment — Amazon.ca arbitrage (US buy, Canada sell, goods never enter India)
- Goods return by customer
- INWARD REMITTANCE FOREIGN
- CPC and SAC
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
