Claim of ITC more than 2B

Claiming Deduction for Write-Off of Unsecured Advance As you've lent an unsecured advance to a partnership firm that's now in insolvency proceedings and likely won't repay the loan, you can claim a deduction for the write-off. Conditions for Claiming Deduction - *Income from Other Sources*: Since you've declared interest income from the loan under "Income from Other Sources" in earlier years, you can claim a deduction for the write-off. - *Loan Becoming Irrecoverable*: You'll need to demonstrate that the loan has become irrecoverable.

The firm's insolvency petition and lack of assets in the balance sheet can serve as evidence. Section 57 of the Income-tax Act You can claim the deduction under Section 57 of the Income-tax Act, which allows deductions for expenses incurred to earn income from other sources. Although the loan itself isn't an expense, the irrecoverable amount can be considered a loss incidental to the earning of interest income. 

Claim the Deduction You can claim the deduction in the year the loan becomes irrecoverable, which appears to be the current year given the insolvency proceedings. Ensure you maintain documentation, such as: -

 *Loan agreement*: Details of the loan provided to the partnership firm. - *Insolvency petition*: Copy of the insolvency petition filed by the firm. - *Balance sheet*: Copy of the firm's balance sheet showing no assets.

From April 2026, claiming ITC above your GSTR-2B will either block your GSTR-3B submission or trigger a DRC-01C notice, so it is no longer a gray area you can quietly ignore. If you have invoices from a supplier who is late in filing, your two options are to wait for the supplier to file their GSTR-1 so the invoice appears in your next GSTR-2B, or carry the credit forward and reconcile the following month.

Chasing the supplier to file on time is almost always the faster fix. If you have already claimed excess and received a DRC-01C, our [GST notice response workflow](https://taxgarden.in/resources/gst-notice-response-workflow-india-sme) covers the reply steps.