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

ITC apportionment: include credits availed in the fiscal year for annual compliance, excluding amounts already apportioned.
Annual Rule 42 calculations should generally include ITC credited to the Electronic Credit Ledger during the fiscal being reconciled, including re-credits posted in returns for prior-year credits, because apportionment is tied to the date of availment. If identical credit amounts were already apportioned under Rule 42 for the prior fiscal after actual turnover was finalised, those previously apportioned amounts should not be included again in the current fiscal's reversal.