ITC reversal treatment on prepaid invoice for personal use

Have a unique situation. Have bought a few flight tickets (Travel in June but payment done in April) for personal use from company vendor. He made a booking against GST number and the Airline has passed ITC on June booking in the invoice issued in April and reflecting in April's 2B.

Understand the ITC will need to be reversed in 3B under rule 42 in Row 4(B1) but since the supply is yet to be made (in June) when should this reversal be done (in April 3B or June 3B?). There is also another complication in reversing permamently i.e 4(B1) in April. That in case we decide to cancel the tickets the Airline will issue a credit note in subsequent months and since the ITC would already have been permanently reversed the credit note will have to be paid out of pocket.

In case this needs be reversed after the supply is made in June, what should be the treatment of ITC available in April 2B? Understand that if it is claimed right now it will invite interest when reversed in June return. So in order to save interest can in Aprils 3B we should reversed as 'Others' 4(B2) and park amount in ECRS ledger for now and then recalimed in June 3B return in Row 4(A5) and 4(D1) and reversed in 4B1 at the same time? Also will any interest apply in such 4B1 reversal in June since ITC was never claimed but only Parked in ECRS ledger

Great question! The scenario of ITC on prepaid invoices for personal use (like flight tickets booked in advance) is tricky under GST. Here's a clear step-by-step treatment based on your facts:

Key points to remember:

ITC on personal use is not allowed as per GST law.
Since flight tickets are for personal use, ITC claimed must be reversed.
The booking/payment is in April (invoice date), but the service (travel) is in June.
ITC appears in April’s GSTR 2B but supply happens in June.

What does the law say?

Rule 42 applies for reversal of ITC on inputs/input services used partly for exempt/non-business/personal purposes.
ITC reversal must be done in the month in which the supply is received or invoice is recorded (whichever is earlier).

Your specific case: ITC on prepaid personal flight tickets

Issue	Treatment
ITC claimed in April (invoice date), supply in June	ITC should ideally be reversed in the month when supply is received (June) as the service is received then. However, since invoice is dated April and ITC appears in April 2B, some reversal action is needed in April as well.
What if reversed in April 3B fully under Rule 42 (4B1)?	This is a permanent reversal, so if the ticket is cancelled later and a credit note comes, you can't reclaim ITC. Risky if cancellation is possible.
Can we do partial reversal in April under Rule 42(4B2) (Others) by parking ITC in ECRS ledger?	Yes, this is a temporary suspension of ITC (not permanent reversal). You park the amount in ECRS in April and later adjust in June. This avoids permanent reversal.
How to handle June return?	In June, when the supply is actually received, you can reclaim ITC by reversing the earlier parked amount (4A5) and also do the actual reversal (4B1) if needed, or adjust as per actual usage.
Will interest apply on such treatment?	No interest should apply if ITC was never claimed permanently but only parked in ECRS. Interest applies if you claim ITC and later reverse it. Since you are temporarily suspending in ECRS, no interest on the parked amount.

Suggested practical approach:

In April 3B (invoice month):
Reverse the ITC under Rule 42(4B2) - Others → Park ITC in ECRS ledger. Do NOT do permanent reversal in 4B1 now.
In June 3B (month of supply):
- Reverse the earlier parking in ECRS ledger by claiming ITC in 4A5 and 4D1.
- Do permanent reversal (4B1) for the portion related to personal use (here, 100% personal use) in the same return.
- If tickets get cancelled, handle credit notes appropriately now.
Interest:
No interest should apply on April’s parked ITC, as ITC was not claimed permanently.

Summary:

Month	Action	Rule	Impact on ITC
April (Invoice month)	Reverse ITC temporarily under 4B2 Others (park in ECRS)	Rule 42	ITC parked; no permanent reversal; no interest
June (Supply month)	Reverse parked ITC from ECRS by claiming in 4A5 and reverse permanently in 4B1	Rule 42	Final reversal done; no interest