Utilisation of ITC

[Rajesh Kumar]

Respected sir / madam

If a TP availed ineligible ITC in 2020-21 and then complete ITC had been utilised.

Now, the said TP wants to reverse the said availed ineligible ITC. So, please guide whether he reverse the said ITC through ITC availed in 2022-23.

Is it wrong to reverse the ITC availed earlier with ITC availed later ? Please guide with provisions.

AI Summary

Input tax credit rectification allowed by set-off from electronic credit ledger, but reversal attracts interest payable in cash.
The taxpayer may discharge the tax liability arising from reversal of ineligible input tax credit by utilising the balance in the electronic credit ledger and must effect the set-off via DRC-03 rather than by direct adjustment in the periodic return; reversals attract interest which is payable in cash from the date of utilisation of the credit.