Applicability of Rule 42 in case of NBFC

[CASUNIL BHANSALI]

Under the scenario where an NBFC has engaged in the sale of securities and opted for ITC reversal as per Rule 38, is it obligated to made reversal as per Rule 42 also ?

[Shilpi Jain]

Once 38 is followed, rule 42 would not apply.

AI Summary

Input Tax Credit reversal under Rule 38 precludes a separate Rule 42 reversal for NBFC securities sales. Where an NBFC engaged in sale of securities has implemented ITC reversal pursuant to Rule 38, it is not required to undertake a separate reversal under Rule 42; satisfaction of the Rule 38 reversal obligation precludes application of Rule 42 and thereby avoids duplicative reversal steps.