Regarding balance ITC after 22nd September.

[JIGNESH SITAPARA]

Dear Experts.

A customer buys 12% and then sells after 22 September at 5%, so what should be done with balance ITC 7% ? Can carry forward ?

[Sadanand Bulbule]

You dont have to reverse balance ITC. You can forward it.If it accumulates due to IDS, you may claim refund of unutilised ITC subject to restrictions, if any.

[rajat solanki]

The said issue has been clarified vide Circular No. 135/05/2020-GST dated 31.03.2020 (as amended), which states that refund of accumulated ITC in terms of clause (ii) of first proviso to Section 54(3) of the CGST Act, is available where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies. However, the input and output being the same in such cases, though attracting different tax rates at different points in time, do not get covered under the provisions of clause (ii) of the first proviso to sub-section

[KASTURI SETHI]

No reversal is required. Goods have not become completely exempt. Only rate of tax has been reduced. It is your amount earned by way of purchase of taxable goods on payment of appropriate tax. 

[Shilpi Jain]

This credit can be utilised for payment of output tax liability or in case it is a huge amount not utilisable fully in near future you can consider apply for refund under inverted duty structure

AI Summary

7% unutilised ITC from rate cut can be carried forward, refund under inverted duty rules needs statutory conditions A buyer purchased goods taxed at 12% and later sold them after 22 September at 5%, creating 7% unutilised ITC. Forum responses converge: no reversal of the balance ITC is required and it may be carried forward and used against future output tax liabilities. If the unutilised credit accumulates to a large extent because input tax exceeds output tax, a refund may be sought under the inverted duty structure subject to statutory conditions; however, a regulatory clarification indicates refunds for inverted duty apply where input/output rates inherently differ, and mere temporal rate reduction may not automatically qualify.