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ITC on Prepaid Expenses

Jatin (Accountant) (3479 Points)

23 May 2018

ITC taken on Prepaid expenses by us on basis of Tax Invoice received & payment also done to supplier but full service not received.

Is it correct? (ITC claimed by us)

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3 Replies

Anirudh (Student) (299 Points)
Replied 24 May 2018

As per one of the condition for claiming ITC u/s 17, ITC can be claimed only if supply has already been received by recipient. So ITC can be claimed only when such expenses would actually accrue.

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Jatin (Accountant) (3479 Points)
Replied 24 May 2018

Thank you Anirudh Ji, what should I do, in case full ITC already claimed

Anirudh (Student) (299 Points)
Replied 24 May 2018

Ur welcome Jatin!! Treatment of reversal of ITC would be similar as is done in case of non payment within 180 days i.e. book output tax liability along with interest in next tax period return & book ITC in the period when expense will accrue.