Rule 42 calculations

[SARTHAK MITTAL]

I have a query in respect of annual calculations of Rule 42.

Will adjustments of prior fiscal be de-considered while computing annual calculations of Rule 42 of current fiscal.

For instance for annual calculations of FY 21-22, will re-credit of ITC (In Sep'21 return) for FY 20-21 due to annual recalculations of Rule 42 be removed for the purpose of NET ITC?

Particulars	Option-1	Option-2
ITC availed during FY 21-22	100	100
Re-credit of ITC pertaining to FY 20-21 in Sep'21 return due to 42-43 annual calc.	10	10
Total credit availed during FY 21-22	110	110
Exempt turnover/Total turnover	10%	10%
ITC to be reversed	11 (10% of 110)	10 (10% of 100)

AI Summary

Debate on Rule 42 GST: Should Prior Year ITC Adjustments Be Excluded from Current Fiscal Calculations? A discussion on a forum revolves around the annual calculations of Rule 42 concerning Goods and Services Tax (GST), specifically whether adjustments from a prior fiscal year should be excluded when computing the current fiscal's calculations. The original query questions if the re-credit of Input Tax Credit (ITC) from the fiscal year 2020-21, credited in September 2021, should be considered for the fiscal year 2021-22's net ITC. Responses suggest that ITC credited to the Electronic Credit Ledger (ECL) should be the net ITC for the year, with some agreeing that prior fiscal credits should not be included again in the current fiscal calculations.