In this Article we will discuss how to reverse ITC in Annual Return for the financial year 2017-18 and also for FY 2018-19.
Taxpayers has not reversed ITC on many occasions like
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 taxpayer wants to reverse this ITC in Annual Return to make good his wrong ITC claim. Question arise how to reverse the ITC in Annual Return ? Whether it should be shown in Table 7 of GSTR-9 which deals with reversal of ITC or Table 13 of GSTR-9 ?
It is pertinent to note that Table 7 can be used for showing reversal of ITC which has been reversed within FY 2017-18 itself through GSTR-3B or DRC-03. Now what to do ? Further to it mare showing the ITC reversal in Table 7 would not be suffice as amount of ITC should be debited from Input Credit Ledger maintained at GST portal or should be paid through cash ledger as in the case of output tax liability. When taxpayer show the amount of reversal in Table 7 without actually reversing the same, it would be considered as wrong declaration in GSTR-9 (Annual Return). Therefore care must be taken before showing any such reversal in GSTR-9. One can follow below mentioned steps for proper declaration of ITC reversal in his annual return.
i) Taxpayer must prepare a working preferably in tabular format for reversal of ITC containing therein all details apparently clear. This detail should separately show reversal of ITC with respect to IGST, CGST and SGST/UTGST.
ii) Now taxpayer should prepare DRC-03 online by logging in to GST portal and pay the liability of ITC reversal with interest upto date @ 24% per annum. The nature of payment in DRC-03 should be selected as “Voluntarily – 73(5)”. Do not forget to mention clearly in DRC-03 that liability has been paid for ITC reversal for a particular financial year. The details made in tabular sheet should be attached with DRC-03. The DRC-03 should be filed with digital signature or EVC.
iii) Now amount of reversal of ITC through DRC-03 should be reflected at Table 13 of GSTR-9 (Annual Return).
In this way the ITC for FY 2017-18 can be reversed in Annual Return. Hope this article will help the taxpayers in filing their annual return in perspective of ITC reversal.