We have been running a series on GSTR 9 where we have broken the form into relatable pieces and explaining table by table how to go preparing the form.
We have covered detailed analysis for Outward Supply and ITC availed during the FY. In this blog, let us look at the next table i.e. Table 7 related to ITC reversal.
Table 7A: Reversal under Rule 37
Rule 37 of CGST Rules prescribes that the credit is required to be reversed in proportion to unpaid amount in GSTR 2 for the month immediately following the period of one hundred and eighty days from the date of the issue of the invoice.
The amount of input tax credit reversed as per this provision shall be added to the output tax liability of the Registered Person for the month in which the details are furnished. The Registered Person shall be liable to pay interest at the rate notified under sub-section (1) of section 50 for the period starting from the date of availing credit on such supplies till the date when the amount added to the output tax liability.
However, following are not to be considered for reversal:-
Supplies made without consideration as specified in Schedule I.
Table 7B: Reversal under Rule 39
Rule 39 deals with the procedure for distribution of input tax credit (ITC) by Input Service Distributor (ISD). ISD is required to distribute ITC in the manner prescribed in the sub-rule 39.
For the amounts to be shown under 7B would be on the basis of the Input Service Distributor credit note issued by Input Service Distributor, as prescribed in sub-rule (1) of rule 54, to reduce the credit issued by the ISD already for any reason. If any supplier gives credit note to the ISD then input tax credit is required to be reduced and shall be apportioned to each recipient in the same ratio in which the input tax credit contained in the original invoice was distributed in terms of clause (d).
Ledger of ISD is required to be matched for the verification of reversal on account of credit note issued by ISD.
Table7C: As per Rule 42 (Reversal of input tax credit for Inputs and Input services)
Input tax credit already availed may be reversed due to multiple reasons. Information to be reported in Table 7 must be derived from Table -4(B) of GSTR 3B which the Registered Person has already reported before filling GSTR 9.
Rule 42 of CGST Rules describe manner of determination of input tax credit in respect of inputs or input services and reversal thereof.
One should report Input tax credit reversal pertaining to the credit availed during financial year 2017-18 and reported in GSTR 3B filled for the period July-17 to March 18 as credit reversal in part 4B (1) of GSTR 3B. But credit reversal reporting requirement in GSTR 3B is consolidated for Input, Input services and capital goods.
Reporting requirement in Table 7C of GSTR 9 requires reversal of Input and input service credit and reversal of capital goods credit in Table 7D. Bifurcation of these amounts reported in Table 4(B)(1) would help tax payer to identify amount to be reported in Table 7C and Table 7D.
Provision of Rule 42 requires Registered Person to calculate ITC reversal in two situations
Detailed calculation steps have been provided in Rule 42 to calculate eligible ITC and ITC to be reversed.
Table 7D: As per Rule 43 (Reversal of input tax credit for capital goods)
One should report input tax credit reversal pertaining to the credit availed during financial year 2017-18 and reported in GSTR 3B filed for the period July-17 to March 18 as credit reversal in Part 4B (1). But credit reversal reporting requirement in GSTR 3B is consolidated for Input, input service and capital goods. Reporting requirement in 7D of GSTR 9 requires reversal of Capital goods credit. Bifurcation of these amount reported in Table-4(B)(1) would help the tax payer to identify amounts to be reported in 7C and 7D.
Provision of Rule 43 requires Registered Person to calculate ITC reversal in two situations:
Table 7E: Reversal under section 17(5) of the CGST Act
As per section 17 (5) there are ineligible credits which are required to be reversed by the Registered Person except in case of certain supplier and supplies. Information is required to be mentioned from the sum total of all the GSTR 3B part 4B (2).
List of Ineligible credit
Verification of ledgers of expenses mentioned above and summary of the same is required to be made mentioning the ineligible ITC pertaining to the same. It might be possible since the ITC of these supplies are not eligible they might not have been availed and not shown in the GSTR 3B returns.
Table 7F: Reversal of TRAN-I credit
This Table requires details of reversal of transitional Transactional credit claimed and reported earlier in 6K and 6L. Transfer of taxes paid under earlier tax regime would flow into GST regime through this self-declaration. And there may be reasons to reverse some or all of this credit due to inaccuracies in understanding the extent of transition credit permitted.
Situation where TRAN-I credit needs to be reversed
Table 7G: Reversal of TRAN-II credit
Situation where TRAN-II credit needs to be reversed
Table 7H: Other reversals
It might be possible that there are situations where the credit availed which is required to be reversed and does not fall under table 7A to 7G. In such situations registered person has to reverse the said credit and would be reflected here.
Supply made and returned subsequently for which credit note was raised but customer has also issued his invoice for the said return.
Credits required to be reverse as per rule 44 of the CGST Rules, 2017 in case of special circumstances read with section 18(4) and section 18(6) of the CGST Act, 2017.
Table7I: Total ITC Reversed (A to H above)
This table is auto filled which is sum total of ITC reversed including Ineligible ITC reversed which was claimed wrongly during July-17 to March-18 and which was duly recorded in GSTR-3B for that period.
Table 7J: Net ITC Available for Utilization (6O - 7I)
This table auto calculate Net ITC available for utilization from details furnished in Table-6 and Table-7. Total credit availed as per Table-6 would be reduced from ITC reduction as declared in Table-7 and net result thereof would be auto populated in Table-7J.
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