Input Tax Credit

ITC reversal: when and how

1 min read Updated 04 Oct 2026 4 views

AI summary

All the situations where ITC must be reversed, and where to report it.

3 sections

Situation	Rule
Common inputs used for exempt/non-business purposes	Rule 42
Common capital goods used for exempt supplies	Rule 43
Supplier not paid within 180 days	Rule 37
Supplier hasn't filed GSTR-3B for that period by 30 September	Rule 37A
Blocked credit claimed	Section 17(5)
Credit note received from supplier	Section 16/34
Goods lost, destroyed, written off or given free	Section 17(5)(h)
Registration cancelled or switching to composition	Section 18(4) — reverse on stock and capital goods

Table 4B(1): permanent reversals (Rules 38, 42, 43 and section 17(5)).
Table 4B(2): temporary reversals that you may reclaim later (e.g. Rule 37, 37A). When reclaimed, show it in 4A(5) and in Table 4D(1).

If the wrongly availed ITC was used, interest at 18% p.a. applies from the date of use (section 50(3), as amended from 1 July 2017).

Sources

Was this guide helpful?