Input Tax credit

[Ethirajan Parthasarathy]

A dealer has some unutilized GST input tax in electronic credit ledger. From a particular date, the goods dealt by him becomes non taxable and hence writes off the balance of input tax in electronic ledger.

Can this write off be disallowed u/s 43B , since relevant input taxes were incurred in earlier years or can be disallowed as “ Prior Period expenses”.

[DR.MARIAPPAN GOVINDARAJAN]

In my view it should be reversed.

[KASTURI SETHI]

I concur with the views of Dr.Govindarajan, Sir. Read the following relevant Section 18 of CGST Act, 2017 and Rule 44 of CGST Rules, 2017

AI Summary

Input tax credit reversal required when supplies become non taxable, necessitating reversal under GST provisions applicable. When goods supplied by a dealer become non taxable, any unutilized input tax credit in the electronic credit ledger must be reversed under the statutory reversal framework and applicable rules, rather than being written off as a prior period expense or treated as an ordinary disallowance for deduction.