Negative ITC in Table 4(A)(5)

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Jomon P B (Querist)
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20 April 2026 We purchased certain items from outside the state and had claimed ITC in Table 4(A)(5), which was later temporarily reversed in Table 4(B)(2). Now, due to defects, the items have been returned and the supplier has issued a credit note.

At present, Table 4(A)(5) is showing a negative ITC balance of ₹1,00,000. We had earlier reversed ITC of ₹1,00,000 against these purchases.

We have no other interstate purchases during this month. Kindly advise how the earlier claimed and reversed ITC should now be treated. Should we show ₹0 in Table 4(A)(5) [₹1,00,000 - ₹1,00,000] and ₹1,00,000 in Table 4(D)(1) under the ITC reclaim column? Please guide.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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20 April 2026 You should avoid double impact. Since the ITC of ₹1,00,000 was already reversed earlier in Table 4(B)(2), the subsequent supplier credit note on return of goods should not again reduce net ITC. Pure tax effect should be nil. For clean reporting, the earlier temporary reversal may be squared off by reclaiming in Table 4(A)(5) with disclosure in Table 4(D)(1), and simultaneously reversing the same in Table 4(B)(1) as permanent reversal, resulting in nil net ITC. Merely allowing negative 4(A)(5) without adjustment may distort the position.

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