Скачать или смотреть Rule 42- Reversal of ITC

ITC Reversal as per Rule 42

See the examples of Rule 42 by clicking here:    • Examples of Rule 42- ITC Reversal  

Check out the video for reversal of ITC as provided in Rule 42 of ITC Rule


Here is the Step for calculating it:-

1. Subtract ITC in respect of Input or input services used exclusively for Non Business Purpose (T1), Exempted Supply (T2), Prohibited items (T3) and Taxable and Business purpose(T4) FROM Total ITC of the month

2 You will get C2 which is common ITC- C2 = T- (T1+T2+T3+T4)

3. Out of common ITC, calculate common ITC for Exempted by formula C2/Total turnover*Exempted turnover = D1

4. 5% of C2 will be deemed ITC for non business purpose = D2

5. Common ITC for business+taxable will be C2-D1-D2

6. Show D1+D2 in Table 11(A)(c)

7.After accepting auto populated detail in GSTR 2, mention NIL ITC available in table 3 of GSTR 2 for ITC in respect of exclusively for Non Business Purpose, Exempted Supply and Prohibited items

8. You will end up taking only ITC in respect of Input or input services exclusively used for taxable supply + common ITC for taxable and business purpose only

9. Now you are in compliance with Section 17(1) &(2) and Rule 42

*** Also check out other important points which i missed to discussed in the video due to time constrain****

D1 and D2 is to be calculated separately for credit of CGST, SGST, UTGST and IGST

Also note that The value of exempt supply include supplies on which the recipient is liable to pay tax on reverse charge basis, transactions in securities, sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building. - Section 17(3)

Also, the figure of D1 and D2 is to be calculated finally again for whole year and the differencial amount between final figure for whole year and ITC reverse in all the individual tax period is to be adjusted under Table 11(A)(e)&(f) - Rule 42(2)