Loss due to fire or theft GST Trearment

[Ashwin Bhalakiya]

Dear Sir

In last few months in my friends company operation, they had one fire and one theft. All Insurance formalities is over. Loss is assessed for both claims and both the parties agree with loss assessment except GST. For GST purpose Insurance are asking either reversal document of Input Tax credit with proof or Loss due to theft/Fire Tax Invoice as a proof that the company has either revered ITC or paid GST on Assessed amount. Based on that they will give GST claim to the company.

I advised to prepare B to C Tax Invoice as Loss due to theft/Fire, put all quantity which are lost with purchase price and at bottom reduce amount as discount for short receipt claim and on balance amount, which is received as Claim charge GST. This will resolve his accounting /inventory effect and also fulfill GST compliance. Please inform whether this suggetion given to him is correct considering section 17(5). Please advise what to be done by friend company if differ with my view.

Regards

Ashwin

[KASTURI SETHI]

There is no logic to issue B to C invoice from all angles. There are other ways to reverse ITC You can reverse via GSTR-3B return or Form GST DRC-03 and intimate GST department and Insurance department. CGST Act and Insurance Act are independent.

[VENU K]

Input tax should be reversed through 3B and loss of stock should be properly recorded in books of accounts by reducing from stock register and also by writing off loss of stock related input tax etc , if any ,not reimbursed by insurance company, through profit and loss account.

If not done properly , and disclosed properly, unnecessary complications will arise in future.

[Shilpi Jain]

Agreed, the reversal can be shown in the GSTR-3B if already done or do it through DRC-03 and show that, if not yet reversed.

AI Summary

Reversal of Input Tax Credit to address stock loss; reverse via return or DRC-03 and record write-off, not B2C invoice. Taxpayer proposed issuing a B-to-C tax invoice for goods lost by fire/theft to evidence reversal or payment of input tax credit; advisers recommend instead reversing attributable input tax credit through GSTR-3B or Form DRC-03, notifying tax and insurance departments, and recording stock reduction and write-off in the accounts, with insurer reimbursement treated separately.