ITC reversal

[DAMINI TALWAR]

Restaurant business is required to charge GST@5% without any ITC i.e. availment of ITC is not allowed to restaurant business. And as per Circular No. 170/02/2022-GST, ITC is required to be claimed as per GSTR-2B and reversal if any can be made in Table 4(B)(1) or Table 4(B)(2). In which table should restaurant business reported reversal of whole ITC and on what basis that specific table is selected for reversal.

AI Summary

Debate on Reporting Input Tax Credit Reversals for Restaurants in GSTR-3B: Permanent vs Temporary Reversal Tables A discussion on a forum addressed the issue of Input Tax Credit (ITC) reversal for restaurant businesses under the Goods and Services Tax (GST) regime. The primary question was which table in the GSTR-3B form should be used for reporting ITC reversals, given that restaurants charge GST at 5% without ITC availment. Participants debated whether ITC reversals should be reported in Table 4(B)(1), for permanent reversals, or Table 4(B)(2), for temporary reversals. Opinions varied, with some suggesting that the circular guiding this process is not binding, and others emphasizing practical approaches to avoid potential complications with tax authorities.