Reversal Of ITC

[Sundar Manokaran]

Dear Sir,

I'm a Registered dealer of tamilnadu and also i'm doing trading activity for the commodity of Tea. I'm a purchasing a Tea from Local Dealers @1% and 5% and availed ITC. After that i am selling the Tea @ 5% Local Sales and CST @ 2% with C Form. From 11.11.2013 the TN Gov announced "Reversal of In Excess of 3%", Sir Please explain how to make a ITC Reversal calculation.

Thanks and Regs

Megha

[DR.MARIAPPAN GOVINDARAJAN]

Whether you have got clarified in the above issue? If not please inform.

AI Summary

Input tax credit reversal guidance for calculating and allocating excess ITC where a threshold-based adjustment applies.
Reversal of input tax credit is required where a dealer availed credit on purchases taxed at different rates but makes both local taxable sales and interstate sales under C form; the state directive mandates adjusting claimed ITC exceeding a prescribed threshold by allocating inward supplies by rate, apportioning ITC between taxable local and interstate/exempt supplies, identifying excess credit, and quantifying the amount to be reversed with supporting invoice reconciliation.