While filing the return, there are many instances in which we have entered the incorrect information. Although under GST law, there is no concept of revision of return we will explain in this Article that option available to us if we have claimed the excess ITC and we will discuss how to reverse ITC in Annual Return for the financial year 2017-18 and also for FY 2018-19.
Following are the instances in which the taxpayer would have to reverse the ITC
The excess claim of the input tax credit,
Reversal of common ITC in Rule 42/43: ITC on input supplies and capital goods, partly used for business and partly for exempt supplies or personal use,
Reversal of ITC due to non-payment within 180 days from the date of issue of the invoice.
Reversal of ITC taken in TRAN-1/2 inappropriately and many others
It has been seen in numerous cases, ITC has not been reversed by taxpayers through GSTR-3B or DRC-03 before 31-03-2019 in case of FY 2017-18 and before 20-10-2019 in case of FY 2018-19.
Now those taxpayers who want to reverse this ITC can make such reversal in Annual Return to make good his wrong. However, the question arises that how to reverse the ITC in Annual Return and Whether it should be shown in Table 7 of GSTR-9 which deals with the reversal of ITC or Table 13 of GSTR-9?
It is important to note that For reversal of ITC, Table 7 can be used which has been reversed within FY 2017-18 itself through GSTR-3B or DRC-03. Now, what’s the next step? Further, mere showing the ITC reversal in Table 7 would not be sufficient, as the amount of ITC should also be debited from Input Credit Ledger maintained at GST portal or if there is no balance standing in the input credit ledger then it should be paid through cash ledger as in the case of output tax liability.
When the taxpayer shows that the amount has been reversed in Table 7 without actually reversing the same by doing the above-specified step then it would be considered as the wrong declaration in GSTR-9 (Annual Return). Therefore it is necessary to take care while reversing the ITC and must be taken before showing any such reversal in GSTR-
In the following mentioned steps, The Taxpayer can properly make the ITC reversal in his annual return:
- It is necessary that all the detail should be apparently clear, he must prepare a working preferably in tabular format for the reversal of ITC. These details contain the separate sheet showing the reversal of ITC with respect to IGST, CGST, and SGST/UTGST.
- Now, the next step is to prepare form DRC-03 online by logging in to GST portal and pay the liability of ITC reversal with interest up to date @ 24% per annum as specified under section 50 of CGST Act, 2017. The nature of payment should be selected as “Voluntarily – 73(5)” in form DRC-03. Also, do not forget to mention clearly that in form DRC-03, liability has been paid for ITC reversal for a particular financial year. The details that you had made in the tabular sheet, should be attached to DRC-03. At last, the form DRC-03 should be filed with a digital signature or EVC.
- No the amount of reversal of ITC through DRC-03 will be reflected in Table 13 of GSTR-9 (Annual Return).
Through this, the ITC for FY 2017-18 can be reversed in Annual Return. I hope this article will assist you in filing their annual return in perspective of ITC reversal.