REVERSAL OF EXCESS ITC

[NAMAN DOKANIA]

in GSTR-3B for the month of April 2019, an ITC of Rs. 1000000/- was excessively taken in GSTR-3B, but the same was reversed in April 2020 in GSTR-3B. The reversal was not separately shown. Rather the same was netted off i.e. to say that total ITC for the month of April 2020 was 2500000/-, but we took net ITC of 1500000/- only.

The same was also shown and reflected in GSTR-9 for the FY 2019-20 & 2020-21.

Now during the audit, department is not allowing the reversal. How can we go about this?

AI Summary

Input Tax Credit reversal: netting in subsequent returns may be supported by reconciliation, CA certification and correction provisions.
Excess Input Tax Credit originally claimed in April 2019 was offset in April 2020 by netting the subsequent month's GSTR-3B rather than showing a separate reversal line; the adjustment was disclosed in GSTR-9. Recommended measures are to prepare a reconciliation evidencing the correction, obtain CA certification of the reversal by netting, and rely on administrative guidance permitting on net adjustments while noting the possibility of departmental proceedings and framing the change as a return correction mechanism.