Ineligible ITC taken

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Abdulla Rashad A (Querist)
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30 November 2024 During the FY 23-24 the party has availed ITC in GSTR 3B which were actually needed to be reversed as per rule 42. The FY is already over, only 9&9c is pending. My question is:

1- Can i reverse this ineligible ITC taken in the table 7 of GSTR 9
2- If not, what we can do
3- if yes, will I be required to pay the reversed ITC in cash or can reverse it from the credit ledger as there is enough balance in credit ledger. Also is interest applicable on the same?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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01 December 2024 1. Yes, you can reverse the ineligible ITC in Table 7 of GSTR-9. Specifically, all ITC reversals can be consolidated under Table 7H. This is the appropriate place to declare such reversals that were required under Rule 42 but not done during the financial year through GSTR-3B.
2. GSTR-9 cannot be revised once filed, so accuracy in reporting is crucial. The tax authorities are actively comparing GSTR-9/9C data with GSTR-3B, making it essential to properly declare these reversals.
3. Interest Liability: You will be required to pay interest at 24% on the ineligible ITC that was wrongly availed
Payment Method: For ineligible ITC that was wrongly availed, you should:
Reverse/pay the amount
Pay the applicable interest
Make these payments to avoid potential litigation and penalties in the future.

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