Rule 42 ITC reversal, Goods and Services Tax - GST

[Rekha Arya]

There is a proviso in rule 42 -

Provided further that where the registered person does not have any turnover during the said tax period or the aforesaid information is not available, the value of E/F‘ shall be calculated by taking values of E‘ and F‘ of the last tax period for which the details of such turnover are available, previous to the month during which the said value of E/F‘ is to be calculated.

In my case , suppose I raise Exempt Invoice annually say for eg. November 2021 and during that month exempt to total turnover ratio is 95%.

In other month during FY 2021-22 there is no exempt turnover but there is taxable turnover. So whether proviso to rule 42 will apply and for all months ITC to be reversed at 95% even when at annual level ratio comes at 60%?

Posts / Replies

[sagar Basu]

As per rule 42(2) where the aggregate of annual turnover calculated finally in respect of D1 and D2

• is greater than the amount determined as per rule 42(1), such additional amount shall be reversed by the registered person in FORM GSTR-3B or through DRC-3 in the month not later than September following the end of financial year to which such credits relates
• Is lower the aggregate amount determined as per rule 1, the excess amount already reversed shall be claim as credit not later than sept.

So you have to calculate monthly basis and also annually, If the annual turnover more or less then do it accordingly

Regards

Sagar

[Ganeshan Kalyani]

(2) Except in case of supply of services covered by clause (b) of paragraph 5 of the Schedule II of the Act, the input tax credit determined under sub-rule (1) shall be calculated finally for the financial year before the due date for furnishing of the return for the month of September following the end of the financial year to which such credit relates, in the manner specified in the said sub-rule and-

[Shilpi Jain]

Any ups and downs or irregularities in the turnover in any of the months gets evened out by recalculating it for the entire year after end of year.

[V Rajalakshmi]

Agree with the view of Ms Shilpi Jain. It will be finally adjusted on an annual basis