ITC on sales return.

This discussion clarifies the treatment of Input Tax Credit (ITC) when goods are returned and subsequently disposed of. Generally, ITC cannot be claimed on goods meant for disposal, and any ITC claimed on the raw materials used to manufacture these goods must be reversed. However, if a fresh invoice is issued by the buyer, it's considered a supply, meaning you only reverse the tax paid on the sale itself, not necessarily the ITC on raw materials.