ITC REVERSAL FOR EXEMPTED GOODS

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This discussion addresses how to reverse Input Tax Credit (ITC) for exempted goods under GST when it was previously overlooked. The recommended methods include reversing the ITC in a subsequent month's GSTR-3B filing or using the DRC-03 form. If opting for GSTR-3B, a reconciliation might be needed to manage any negative balance in the Net ITC column. The user seeks specific guidance on selecting the correct 'cause of payment' when filing DRC-03.

PANDIAN BRIGHT

PANDIAN BRIGHT (Querist)
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20 February 2024 One of my Clients selling exempted goods under GST. for the past 6 months we forget to reverse the ITC. Now we want to know how to reverse ITC? Please Guide

CA. Bhavik P. Chudasama

CA. Bhavik P. Chudasama (Expert)
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20 February 2024 You can Reverse the Same in Subsequent Month GSTR 3B or you can file DRC-03 and reverse the amount

PANDIAN BRIGHT

PANDIAN BRIGHT (Querist)
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20 February 2024 Thanks for your reply. If I try to file subsequent month GSTR-3B. It shows Negative Balance in Net ITC Column.

CA. Bhavik P. Chudasama

CA. Bhavik P. Chudasama (Expert)
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20 February 2024 Yes, for that you can keep a Reconciliation for that Particular Month GSTR 3B and if you dont want to show Negative ITC then you file DRC-03 as stated earlier

PANDIAN BRIGHT

PANDIAN BRIGHT (Querist)
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20 February 2024 Ok Sir. Thank You very much.

PANDIAN BRIGHT

PANDIAN BRIGHT (Querist)
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01 March 2024 Sir, This is the continuation of our earlier discussion about Reversal of ITC of exempted goods. Please guide me to reverse the ITC through DRC 03. Which "cause of payment" should i select under DRC O3?

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