Ineligible ITC of prev years reclaimed in this year i.e. FY 2024-25 but failed to reverse same

This query is : Resolved

Venkateshwarlu Pulluri (Querist)
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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.......

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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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.

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