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Itc reversal

31 May 2020

On of my clients had availed ITC (which comes under Blocked credit) in FY 17-18 and FY 18-19. But the same was not utilized for set off as there was no outward supply.

But his previous Gst practitioner has neither reversed the ITC in GSTR3B nor in the annual return for fy 17-18 & fy 18-19.

Now the client has started his outward supplies and is raising sales invoices.

What should we do regarding the ITC which is reflected in the Electronic Credit Ledger

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10 Replies

Nivesh tater (Tax Executive at Mazars India Bangalore) (205 Points)
Replied 31 May 2020

Assuming your client has not filed Annual return or not required to filed Annual return for FY 17-18. The excess credits can be reversed using DRC-03 against electronic credit balance along with interest. For the FY 18-19, you can still reverse in Annual return by September 2020.

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Revathy V (35 Points)
Replied 31 May 2020

But they have already filed annual return for both Fy 17-18 and fy18-19

adienterprise pvt ltd (31 Points)
Replied 31 May 2020

According to cgst act 2017 section 17(5) you have availed itc of block credit and so kindly reverse your itc right now put all the itc credit in inelgible itc. and the outward supplies you have made and adjusted through the itc credit ..pay all the gst amount under 3b u/s 39 of next return with interest
you dont have to mention taxable amount .

Revathy V (35 Points)
Replied 31 May 2020

Thank you

Nivesh tater (Tax Executive at Mazars India Bangalore) (205 Points)
Replied 31 May 2020

I would insist to reverse through DRC-03. Though they have filed Annual return, if you reverse through DRC-03, you need to give for which FY you want to pay. So you have better control rather than GSTR-3B. For GST updates follow @ gstgist on Instagram. Amendments are explained in lucid manner.

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