ITC Reversals in GSTR3B

[Prem Gomathy]

This is the case of a hospital clinic filing under QRMP scheme. While filing GSTR-3B, the Gross input tax credit comes from GSTR-2B.

Credit which cannot be taken has to be reversed. We have 2 options to reverse credit. First option is to reverse u/s 42 and 43. Another option is to reverse under "Other Reversals"

So the questions are:

i) There are input goods/services that are fully used to supply exempt services. Under which of the 2 options above is such ITC to be reversed.

ii) What reversal is to be shown in "Other Reversals?"

iii) Whether instead of considering reversals,we need to consider such credits are ineligible credits?

AI Summary

Input tax credit reversal required for credits used exclusively for exempt supplies, treated as ineligible and reversed accordingly.
Dispute centers on where to report reversal of ITC wholly used for exempt supplies in GSTR 3B. Two approaches exist: (i) adjust gross credits to show net eligible credit and report the difference as ineligible, or (ii) record an actual reversal from the electronic credit ledger under "Other Reversals." Commentators stress that entitlement is governed by the Act, that such credits are to be treated as ineligible, and recommend reversing them from the electronic credit ledger while seeking clarity from the tax authority.