ITC reversal FY 2023-24
This query is : Resolved
20 February 2025
Hi
GSTR9 is not applicable
1) wrongly claimed Ineligible ITC of Rs. 100 in FY 2023-24 - Q- how to reverse this now ?
2) out of Rs 100 - availed 60. later paid 60 but not reported in 3b, accumulated in Cash Ledger (ECL) - so can i reverse this 60 and pay through cash ledger - while filing Feb 2025 GSTR3b or file DRC 03?
3) if i just reverse 60 - what about the non-availed 40 which is still lying in Electronic Credit Ledger?
4) Do i have to pay interest @24% (Reversal of ineligible ITC) on Rs 60 ? & Late payment of Interest @18% on 60- BOTH 24% & 18%?
Thank you
GSTR9 is not applicable
1) wrongly claimed Ineligible ITC of Rs. 100 in FY 2023-24 - Q- how to reverse this now ?
2) out of Rs 100 - availed 60. later paid 60 but not reported in 3b, accumulated in Cash Ledger (ECL) - so can i reverse this 60 and pay through cash ledger - while filing Feb 2025 GSTR3b or file DRC 03?
3) if i just reverse 60 - what about the non-availed 40 which is still lying in Electronic Credit Ledger?
4) Do i have to pay interest @24% (Reversal of ineligible ITC) on Rs 60 ? & Late payment of Interest @18% on 60- BOTH 24% & 18%?
Thank you
12 August 2025
Hey! Here's how to handle your ITC reversal and related queries for FY 2023-24:
1) How to reverse wrongly claimed ineligible ITC of Rs. 100?
You need to reverse the entire ineligible ITC of Rs. 100 by adding it to your output tax liability in your next GSTR-3B return.
Reverse the amount in Table 4(B) of GSTR-3B (details of ITC reversed).
The reversal can be done in the month you discover the mistake (February 2025 in your case).
2) What about the Rs. 60 already paid but not reported in GSTR-3B and accumulated in Electronic Cash Ledger (ECL)?
Since you have already paid Rs. 60 but didn’t report it in GSTR-3B, you can utilize this Rs. 60 from the Electronic Cash Ledger to pay your reversal liability.
You should report the reversal of Rs. 100 in GSTR-3B (Rs. 60 paid through cash ledger and Rs. 40 to be reversed as ITC reduction).
If you fail to report reversal properly in GSTR-3B, you can also file Form DRC-03 to pay outstanding tax/interest/penalty.
3) What about the remaining Rs. 40 lying unavailed in Electronic Credit Ledger?
The Rs. 40 ITC which was not availed but is in the Electronic Credit Ledger still needs to be reversed.
You need to reduce the available ITC balance by Rs. 40 in your next GSTR-3B filing under ITC reversal.
This will be reflected in the Table 4(B) as ITC reversal without payment, as you are just reducing your credit balance.
4) Interest Applicability:
Interest @24% p.a. is applicable on the ineligible ITC amount that was wrongly claimed and utilized (Rs. 60).
This interest is for the delay in payment of tax due to wrongful ITC claim.
Interest @18% p.a. is NOT applicable on the same Rs. 60 separately. The 24% interest is the applicable rate on ITC reversal.
Interest calculation is from the date of availing ITC till the date of reversal/payment.
1) How to reverse wrongly claimed ineligible ITC of Rs. 100?
You need to reverse the entire ineligible ITC of Rs. 100 by adding it to your output tax liability in your next GSTR-3B return.
Reverse the amount in Table 4(B) of GSTR-3B (details of ITC reversed).
The reversal can be done in the month you discover the mistake (February 2025 in your case).
2) What about the Rs. 60 already paid but not reported in GSTR-3B and accumulated in Electronic Cash Ledger (ECL)?
Since you have already paid Rs. 60 but didn’t report it in GSTR-3B, you can utilize this Rs. 60 from the Electronic Cash Ledger to pay your reversal liability.
You should report the reversal of Rs. 100 in GSTR-3B (Rs. 60 paid through cash ledger and Rs. 40 to be reversed as ITC reduction).
If you fail to report reversal properly in GSTR-3B, you can also file Form DRC-03 to pay outstanding tax/interest/penalty.
3) What about the remaining Rs. 40 lying unavailed in Electronic Credit Ledger?
The Rs. 40 ITC which was not availed but is in the Electronic Credit Ledger still needs to be reversed.
You need to reduce the available ITC balance by Rs. 40 in your next GSTR-3B filing under ITC reversal.
This will be reflected in the Table 4(B) as ITC reversal without payment, as you are just reducing your credit balance.
4) Interest Applicability:
Interest @24% p.a. is applicable on the ineligible ITC amount that was wrongly claimed and utilized (Rs. 60).
This interest is for the delay in payment of tax due to wrongful ITC claim.
Interest @18% p.a. is NOT applicable on the same Rs. 60 separately. The 24% interest is the applicable rate on ITC reversal.
Interest calculation is from the date of availing ITC till the date of reversal/payment.
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