Reversal of excess input

[Saurabh Kataria]

Can i reverse excess input tax credit of f.y 2017-18 on today through DRC3 by using electronic credit ledger balance.?

[KASTURI SETHI]

Not at all. Only through electronic cash ledger only.

[Saurabh Kataria]

But as per law you can paid liability under section 73(5) on voluntary basic through DRC-3 by using cash on credit ledger.But annual return liability can be paid through DRC-3 by using only cash balance.now i want to reverse excess input credit on voluntary basic by using credit ledger with interest of 24% before filling of gstr 9. interest will paid only in cash. As per this I i can paid through credit ledger before flling of GSTR-9

[KASTURI SETHI]

Pl. refer to your further query at serial no.2 dated 5.8.19 above.

Yes. Liability GST under 73 (5) of CGST Act can be paid through Electronic Credit Ledger by way of Form DRC-03.I agree with you.

[Saurabh Kataria]

So i should reversed excess input credit through DRC-03 by using credit ledger balance, so then filled GSTR-9 , and its impact in GSTR-9 presentation is nothing.

[KASTURI SETHI]

You are mixing SCN and GSTR-9. For GSTR-9, DRC-03 is for cash payment. See Notification No.74/18-CT dated 31.12.18 (Serial No. 9 above Table No.17.

[Ganeshan Kalyani]

Department clarification also states that ITC can be reversed through DRC-03 by cash ledger only.

[Saurabh Kataria]

In which notification department has clarified it.?

[Saurabh Kataria]

In notification no. 74/2018 govt say,"Towards the end of the return, taxpayers shall be given an option to pay any additional liability declared in this form, through FORM DRC-03.Taxpayers shall select ―Annual Return in the drop down provided in FORM DRC-03. It may be noted that such liability can be paid through electronic cash ledger only.

Now i just want to reverse the excess input tax credit of f.y 17-18 through DRC-3 by using credit ledger balance before filling of Annual return in "voluntary basic selection" because i reversed this before filling of GSTR 9, so that is not my annual return liability. On filling of annual return i have no liability because i have already reversed it. I have asked the above matter on phone from CBIC they said yes you can pay it before filling of GSTR-9 by using credit leder but interest will be paid in cash but after filling of GSTR-9 all liability will be paid in cash only, that is also notification saying.

[KASTURI SETHI]

I am not expert in functioning of Common Portal System. Such problems are solved through face-to-face interaction.

[Saurabh Kataria]

Face to face interaction is better, but the matter is urgent.

[PIYUSH GUPTA]

Yes saurabh ji you can do the same ,absolutely no problem in that .

[Saurabh Kataria]

But,Many professionals is saying that Department may say in assessment , that it is an annual return liability because there is no coloum to report this reversal in GSTR 9 i.e reversed after 31st march 2019. In GSTR 9 table no. 6 will show difference.with difference filling of annual return that means this is annual return liability and department may say that taxpayer is already know on that time of voluntary reversal that it is annual liability.taxpayer is just reversed before filling of GSTR 9 to avoid cash payment.

[PIYUSH GUPTA]

Section 73(5) talks about voluntary payment of tax before scn does not talks about before annual return or after annual return.It says that if u have any liability which you voluntary wants to discuss no issues in that.When department will ask we just have to clarify .Secondly this is in the law and liabilty can be discharged only in cash for annual return is written in explanation to notification and i think act prevails over notification.This is my interpretation about issue .

[Saurabh Kataria]

So if i reversed before filling of annual return, then i could not reflect it in Annual return.

[Saurabh Kataria]

Have you reversed in any case like this.?

[PIYUSH GUPTA]

Yes i have done it.Secondly as per press release input credit cannot be reversed through annual return .

[Saurabh Kataria]

So sir you have filling the annual return with difference.?

Suppose I have take credit of IGST rs. 1 lakhs.my actual credit is only 80000 rs nd 20000 rs is wrong input credit taken for f.y 17-18

Now presentation in gstr 9 is as follow:

Coloum no. 6a auto populated will show 100000 rs.

Now in coloum no. 6b i have to entered my actual credit i.e 80000 then table no. 6 show 20000 rs difference.

In table no. 8a auto populated 80000 and 8b will show 80000.

No difference in table no. 8

And filled the return with difference of 20000 in table no. 6

Because i reversed it after 31st march 2019, there is no coloum to present 20000 rs in gstr 9.

AI Summary

Reversal of excess input tax credit: timing and ledger choice affect payment route and annual return reporting. Reversal of excess input tax credit via DRC-03 implicates whether payment may be made from the electronic credit ledger or must be paid from the electronic cash ledger; departmental notification language restricts annual-return DRC-03 payments to the electronic cash ledger, and interest on voluntary reversals is payable in cash. The timing of reversal relative to filing the annual return affects how the reversal is reported and may expose taxpayers to assessment arguments about annual-return liability. Portal functioning and notification interpretation dictate practical treatment.