TaxTMI 
TaxTMI 
Verification and monitoring in cases of reversal of ineligible ITC.
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.... IGST ITC in proper Table will result in short settlement of fund transfer to the State. 2. In some cases, it has been noticed that there is huge input tax credit on inward supplies, but outward supplies are exempted. In such cases, if the taxpayer doesn't reverse the IGST Credit which is ineligible, IGST credit will go to the indivisible pool and IGST settlement gets affected. If the actual ineligible IGST credit is properly reversed by the taxpayers, the State will get 50% of the ineligible credit so reversed every month. 3. Taxpayers may not be aware about the IGST Settlement through fund transfer mechanism and do not report their IGST ITC claim and reversal correctly, as they believe there is no intention on their part to evad....
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....dhere to the ensuing instructions in this regard. iii) Out of the amounts available in Table 4A of FORM GSTR- 3B, if the taxpayer has any ineligible input tax credit which has to be reversed permanently on account of Section 17(5) of the Act (blocked credit), Rule 38 (reversal of credit by a banking company or a financial institution) or Rule 42 (reversal of credit on inputs and input services if the same is used for non-business purpose or used for the outward supply of exempted goods or services) or Rule 43 (reversal of credit on capital goods if the same is used for non-business purpose or used for the outward supply of exempted goods or services) of the CGST/DGST Rules, 2017, as the case may be, the same shall be reversed by de....
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....tax dues, if any. vi) Input tax credit not available, on account of limitation of time period as specified in Section 16(4) of the CGST/DGST Act, 2017 or where the recipient of an intra- State supply is located in a different State /UT than that of place of supply, may be reported by the taxpayer in Table 4(D)(2) of FORM GSTR-3B. Such details are available in Table 4 of FORM GSTR2B. The amount declared in Table 4(D)(2) of FORM GSTR-3B gets appropriated during IGST settlement as the reversal is of permanent nature. Table Description Nature of reversal Whether IGST gets appropriated to the State 4(B)(1) As per rules 38,42 & 43 of CGST Rules and section 17(5) Permanent Yes 4(B)(2) Others Temporary N....
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....t of an amount equal to 50% of the eligible input tax credit per month shall not be eligible for the rest of the amount. (Section 17(4) of the CGST/DGST Act, 2017 read with Rule 38 of the CGST/DGST Rules. 2017). Rest shall be declared as ineligible credit. d) Input tax credit in respect of the inward taxable supplies of goods or services or both which are mentioned in Section 17(5) of the CGST/DGST Act. 2017 is not eligible as the same is blocked vide said section. (i) Motor vehicles for transportation of persons having approved seating capacity of not more than thirteen persons (including the driver), except when they are used for further supply of such motor vehicles or for transportation of passengers or for imparting t....
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.... selling residential apartments (flats) has to reverse the input tax credit in GSTR 3B. Above scenarios/examples are indicative only. There may be other cases which may be considered by the Proper Officers in accordance with law. 7. REVERSAL MONITORING PROCESS To ensure inflow of IGST Credit eligible to the State, the disclosure of correct figures in GSTR 3B by the taxpayers shall be ensured through the following steps. 7.1. Verification schedule Once the GSTINs are identified and letters (with DIN/RFN) are sent to the said GSTINs for ITC reversal, the Proper Officer shall finalise the verification schedule completing the verification within 15 days after filing of relevant return. 7.2. Verification Process 7.2.1.....