Interest on Reversal of ITC.

[PRAVIN TALEGAONKAR]

Dear All,

We have taken ITC during 2022-23 and now we want to reverse the same. We have ITC balance higher than amount to be reversed in credit ledger.

Now my question whether Interest is applicable on amount reversed during current month.

Regards,

Pravin Talegaonkar

AI Summary

Interest on wrongly availed ITC applies only where aggregate ledger balances show utilisation before reversal.
Interest on wrongly availed ITC is payable only if the aggregate balance in the electronic credit ledger across IGST, CGST and SGST falls below the wrongly availed amount, because that shortfall constitutes utilisation; if the reversal occurs before any such utilisation and the combined ledger balance never fell below the amount, no interest under the statutory interest provision is attracted. Taxpayers should retain ledger downloads to evidence non utilisation, and disclosure in returns should follow practice for either ''others'' or permanent reversal adjustment lines as applicable.