Home Forum Goods and Services Tax - GST Month 4 2021 2021 (4) This
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ITC Reversal - Goods and Services Tax - GSTExtract As per proviso to section 16(2) read with Rule 37, a business entity who fails to pay the vendor within 180 days of issue of invoice has to reverse the ITC Availed on such invoices. All will agree that there is vast difference between ITC availed and ITC utilized. Unless ITC availed is utilized , there is no loss of revenue to government. It is not clear why the statute provides for reversal of ITC availed with interest under Rule 37 read with Sec.16(2). Can anyone throw light on this. For reversal, it is provided that relevant ITC will be treated as output tax. Strangely it appears that this output tax can be discharged by utilizing the same ITC which is being reversed. Is my understanding correct.
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