Reclaim of ITC earliear reversed under Rule 42 of GCST Act

[Firm 007]

Dear Members,

I have a query related to Rule 42 of CGST Act, 2017

I transfer some amount of credit to permanent reversal under column 4B (1) of GSTR 3B due to the fact that input will used for exempt supply now the fact has changed and those supply will be considered as taxable. Now i wanted to reclaim the reversed ITC. Am i eligible to reclaim it?

If yes, What document i need to be have with me?

[Shilpi Jain]

You can re-claim it. Hopefully this is within the 16(4) time limit so that you do not have too much trouble from the department.

You can defend in case of any dispute stating that it is only a disclosure error and ensure after you re-claim the credit you make an intimation to the department as well explaining things.

AI Summary

Reclaim of Input Tax Credit permitted when reversed for exempt use if supplies become taxable, subject to time limits and notice.
Reclaim of Input Tax Credit reversed under Rule 42 is permissible where supplies become taxable, subject to the time limit under Section 16(4). The taxpayer may treat the original reversal as a disclosure error, should promptly intimate the department after re-claiming, and must retain supporting documents evidencing use of inputs for taxable supplies.