Reversal of ITC
This query is : Resolved
20 January 2021
While filing GST return for May 2020, I considered certain ITC of capital goods as ineligible because of blocked credit and mentioned under Table 4(d) - ineligible ITC as per section 17(5).
But now in Dec 2020 it was eligible ITC and hence took ITC in GSTR 3B of Dec 2020.
I want to confirm whether this claim of ITC is valid now?
But now in Dec 2020 it was eligible ITC and hence took ITC in GSTR 3B of Dec 2020.
I want to confirm whether this claim of ITC is valid now?
10 July 2024
Yes, your claim of Input Tax Credit (ITC) in GSTR 3B for December 2020 is valid under the GST rules.
Here’s the explanation:
1. **ITC on Capital Goods**: According to GST rules under Section 17(5), certain categories of input tax credits are blocked, including ITC on goods or services used for construction of immovable property and certain other activities. If you had originally considered ITC on capital goods as ineligible under this provision while filing your GST return for May 2020, you would have appropriately marked it under Table 4(d) - ineligible ITC as per section 17(5).
2. **Change in Eligibility**: If the capital goods for which you claimed ITC in May 2020 were originally considered ineligible under section 17(5) but became eligible for ITC subsequently, you have the option to claim such eligible ITC when the eligibility criteria are met.
3. **Claiming ITC in December 2020**: Since you determined that the ITC on these capital goods became eligible in December 2020, you correctly claimed this ITC in your GSTR 3B for that month. It’s important to note that ITC can be claimed in the tax period in which you become eligible to claim it, provided all other conditions for claiming ITC are met.
4. **Validation**: To validate your claim:
- Ensure that the capital goods in question now qualify for ITC under GST rules.
- Verify that the conditions under Section 17(5) no longer apply to restrict the ITC on these capital goods.
- Ensure that you have proper documentation and evidence to support the claim of ITC in December 2020.
In conclusion, your claim of ITC in December 2020 is valid since the capital goods have now become eligible for ITC under GST rules. Make sure to maintain records that substantiate the change in eligibility and the basis for claiming ITC in December 2020. If you have any doubts or specific queries related to the eligibility criteria or documentation, it’s advisable to consult with a GST expert or your tax advisor for precise guidance tailored to your situation.
Here’s the explanation:
1. **ITC on Capital Goods**: According to GST rules under Section 17(5), certain categories of input tax credits are blocked, including ITC on goods or services used for construction of immovable property and certain other activities. If you had originally considered ITC on capital goods as ineligible under this provision while filing your GST return for May 2020, you would have appropriately marked it under Table 4(d) - ineligible ITC as per section 17(5).
2. **Change in Eligibility**: If the capital goods for which you claimed ITC in May 2020 were originally considered ineligible under section 17(5) but became eligible for ITC subsequently, you have the option to claim such eligible ITC when the eligibility criteria are met.
3. **Claiming ITC in December 2020**: Since you determined that the ITC on these capital goods became eligible in December 2020, you correctly claimed this ITC in your GSTR 3B for that month. It’s important to note that ITC can be claimed in the tax period in which you become eligible to claim it, provided all other conditions for claiming ITC are met.
4. **Validation**: To validate your claim:
- Ensure that the capital goods in question now qualify for ITC under GST rules.
- Verify that the conditions under Section 17(5) no longer apply to restrict the ITC on these capital goods.
- Ensure that you have proper documentation and evidence to support the claim of ITC in December 2020.
In conclusion, your claim of ITC in December 2020 is valid since the capital goods have now become eligible for ITC under GST rules. Make sure to maintain records that substantiate the change in eligibility and the basis for claiming ITC in December 2020. If you have any doubts or specific queries related to the eligibility criteria or documentation, it’s advisable to consult with a GST expert or your tax advisor for precise guidance tailored to your situation.
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