Understanding Reversal of Input Tax Credit under GST Rules
Dec 16, 2024
Pratik Chhajed
The Goods and Services Tax (GST) system is an integrated approach in India that simplifies taxation. Among its many features, Input Tax Credit (ITC) serves as a key element, allowing businesses to claim credits for taxes paid on inputs used in the supply of goods or services. However, the concept of ITC also includes the provision of its reversal under specific circumstances.
This blog focuses on the reversal of Input Tax Credit, with its regulations, consequences, and compliance requirements. Businesses need to understand these requirements to comply with GST laws and avoid potential penalties.
Concepts of Input Tax Credit
Input Tax Credit allows businesses to offset tax paid on inputs against output tax liability, ensuring taxes are applied only on value added. ITC reversal occurs under conditions like non-payment to suppliers, use of inputs for exempt supplies, or non-business use. Understanding these conditions is essential for compliance and accurate tax filings.
1. Role of Input Tax Credit
The ITC allows businesses to reduce their tax liability by claiming credits for the GST paid on purchases that are used to produce taxable goods or services. It helps reduce tax burdens, leading to more efficient operations and cost savings. However, ITC is subject to specific conditions, and its reversal occurs when businesses fail to meet these conditions, resulting in the reversal of previously availed credits. In this blog, we will discuss various conditions under which ITC reversal takes place.
2. Reason for Reversal of Input Tax Credit under GST
Reversal of Input Tax Credit under GST allows businesses to claim credits only for eligible business activities, preventing misuse of the tax system. It ensures compliance when goods or services transition to exempt or non-taxable categories and protects government revenue through proper credit adjustments.
3. Impact of ITC Reversal
Reversing Input Tax Credit directly increases a business's output tax liability. As a result, the reversed credit amount must be repaid, which may include interest if there are delays in compliance. Inaccurate ITC reversal can lead to penalties, legal consequences, and reputational damage.
To minimize these risks, businesses need to understand the rules governing ITC reversals and comply with the GST regulations.
Key Rules Governing ITC Reversal
Reversal of Input Tax Credit is essential to ensure compliance with GST regulations and effective tax management. The following CGST rules outline the conditions for ITC reversal:
Rule 37: ITC must be reversed if the supplier does not pay tax within 180 days from the invoice date, ensuring credits are not claimed when tax payment is pending.
Rule 38: This rule mandates the reversal of ITC claims on ineligible goods or services, such as personal expenses or blocked credits, ensuring only legitimate business-related inputs benefit from ITC.
Rule 42: Governs the apportionment and reversal of credit on common inputs used for taxable and exempted supplies, mandating the reversal of proportionate ITC on exempted goods or services.
Rule 43: Applies to capital goods used for taxable and exempt supplies, requiring proportional reversal based on the exempt supply ratio over the asset's useful life.
Rule 44: Governs ITC reversals when supplies transition to non-taxable or exempt categories and ensures proper tax adjustments are made.
Rule 45: ITC on goods or services used for construction or development of immovable property must be reversed when not directly used for taxable supplies.
Rule 46: ITC on inputs used for manufacturing exempt products or services should be reversed when the exempt supply exceeds the taxable supply.
Rule 47: ITC claimed on inputs for personal use must be reversed, ensuring credits are linked to taxable business activities.
Rule 48: In case of cessation or discontinuation of business, ITC on goods held in stock must be reversed, ensuring no undue tax advantage is retained.
Rule 49: A registered person opting for the composition scheme must reverse the ITC on goods in stock at the time of opting in, in accordance with the simplified taxation method.
These rules ensure businesses comply with ITC eligibility, preventing misuse or excessive claims under the GST regulations. Understanding these rules is essential, as the next step involves identifying the specific conditions that necessitate ITC reversal.
Conditions Requiring ITC Reversal
Under the GST regime in India, the Central Goods and Services Tax Act 2017 outlines the circumstances in which Input Tax Credit may be reversed:
Non-payment of Tax: If the supplier fails to pay tax on the supply within the prescribed time, ITC claimed by the recipient will be reversed.
Non-Business Purposes: ITC is not available for goods or services used for personal or non-business activities.
Depreciation Claim: If depreciation is claimed on the tax component of capital goods, the ITC for that portion is reversed.
Mismatch in GSTR-2A and GSTR-3B: If the ITC claimed in GSTR-3B does not match the details in GSTR-2A (or 2B), ITC will be reversed.
Return of Goods: If goods are returned, the ITC claimed on those goods must be reversed.
Non-compliance by Supplier: If the supplier has not filed GST returns or paid taxes, the ITC claimed by the recipient must be reversed.
Ineligible Goods or Services: ITC is not available on certain goods and services (e.g., motor vehicles, food and beverages, personal use items). If incorrectly claimed, it must be reversed.
Change in GST Registration Status: If a person becomes unregistered or switches to a different tax scheme, ITC may be reversed.
Cancellation of Registration: Upon cancellation of GST registration, ITC on remaining stocks and unutilized capital goods must be reversed.
Ineligible Exempt Supplies: ITC used for exempt or non-GST supplies will be reversed.
Stay ahead of GST compliance requirements with Pazy's seamless ITC reversal tracking features. Contact us for more details!
Each of these situations demands careful compliance to avoid errors in tax filings, thus understanding how to calculate ITC reversal under GST rules is important.
Calculation of Input Tax Credit Reversal
ITC reversal is required in scenarios like non-payment of GST by the supplier, exempt goods/services or common credit used for both taxable and exempt supplies. Failure to reverse ITC on time results in an 18% annual interest on the overdue amount. Thus, making timely reversals is essential to avoid penalties. The following are the formulas for ITC reversal based on different scenarios.
1. Non-payment of GST by Supplier
If a supplier fails to pay GST on the supplied goods or services, the buyer must reverse the ITC claimed on those purchases. The reversal is calculated using the following formula.
Reversed ITC=Input Tax Credit Claimed × (Period of DefaultTotal Period)
Example: If the buyer claimed ₹50,000 as ITC on a purchase, and the supplier failed to pay GST for 2 months out of 12 months, the ITC reversal would be calculated proportionately. As a result, the buyer must reverse ₹8,333 of the claimed ITC.
2. Exempted Goods/Services
When inputs are used to produce exempt goods or services, ITC must be reversed proportionally based on the ratio of exempt supplies to total supplies.
Reversal of ITC=Total ITC on Inputs × Value of Exempted Goods/ServicesTotal Value of Goods/Services Supplied (Taxable + Exempted)
Example: If the total ITC claimed on inputs is ₹100,000, the value of exempt supplies is ₹300,000, and the total supplies (taxable + exempt) is ₹1,000,000. The ITC reversal will amount to ₹30,000.
3. Reversal Under Rule 42 and Rule 43
Reversal is not required if the inputs are used only for taxable supplies. However, if the inputs are used for both taxable and exempt supplies, a proportional ITC reversal is required. The reversal is calculated using the following formula:
ITC Reversal=ITC on Inputs × Exempt Supplies ValueTotal Supplies Value
Example: If the total ITC on inputs is ₹60,000, the value of exempt supplies is ₹200,000, and the total supplies are ₹500,000, then reversed ITC would be ₹24,000.
Meanwhile the ITC reversal for capital goods is calculated over a period (typically 5 years) based on their use for taxable versus exempt purposes. The Central Board of Indirect Taxes & Customs guidelines specify that this reversal is governed by Rule 42 and Rule 43 of the GST Rules.
4. Non-Business Usage
If office computers are used for personal purposes, the ITC claims must be reversed proportionately.
Reversed ITC=ITC Claimed on the Asset × Percentage of Personal Use
Example: For ₹50,000 ITC claimed on office computers, if 20% is used personally, then the reversed ITC would be ₹10,000.
Simplify your ITC reversal process with Pazy. Partner with us today to optimize your ITC claims, ensure compliance, and minimize errors.
Once the ITC reversal is calculated, it is essential to fulfill the reporting requirements to ensure transparency and accurate tax filings under GST regulations.
Reporting Requirements for ITC Reversal
ITC reversal reporting is a crucial part of GST compliance and ensures that businesses maintain accurate records for tax purposes.
1. Reporting ITC Reversal in GSTR-3B and GSTR-9
ITC reversals must be reported in Form GSTR-3B, which is filed on a monthly or quarterly basis. Additionally, any necessary adjustments or disclosures related to ITC reversals should be made in Form GSTR-9, the annual return.
2. Impact on Electronic Credit Ledger
ITC reversals directly impact the Electronic Credit Ledger by decreasing the available credit, which may affect future tax payments and compliance.
3. Importance of Accurate and Timely Reporting
Accurate and timely reporting ensures compliance, minimizes discrepancies between filings, and reduces the risk of inspection by tax authorities.
While businesses may have robust systems in place, challenges in ITC reversal compliance are common. Let's examine these challenges and explore practical solutions.
Challenges and Solutions
1. Issues in ITC Reversal Compliance
Businesses often encounter challenges such as misclassification of taxable and exempt supplies, errors in calculating proportionate reversals, and failure to reverse ITC within the prescribed timelines. These challenges can lead to non-compliance and may result in penalties.
2. Tips for Maintaining Accurate Records
Businesses should maintain detailed records of both taxable and exempt transactions and regularly reconcile ITC claims with supplier invoices. This helps in avoiding discrepancies and facilitates smooth compliance with GST regulations.
3. Advisory on Timely Reversals to Avoid Penalties
Adopting GST-compliant software ensures timely ITC reversals and reduces the risk of penalties or interest due to delays or errors.
Feeling overwhelmed by the challenges of ITC reversal? Let Pazy be your trusted partner in simplifying the ITC reversal process. With Pazy's automation, you can easily manage reversals, avoid errors, and ensure compliance.
Before you make a decision, let's take a closer look at how Pazy optimizes ITC reversal under GST rules.
Simplify Reversal of Input Tax Credit with Pazy
Pazy simplifies the reversal of Input Tax Credit by automating the identification and adjustment of ineligible credits, ensuring compliance with tax regulations. Our two-way integration with your accounting system schedules auto-reconciliations of GST data and syncs vendor payment decisions, running thrice a day to maintain accuracy and minimize errors.
Automated GST Reconciliation
Pazy ensures accurate reconciliation of GST data with accounting records, automatically identifying discrepancies that may impact ITC claims.
2A/2B Reconciliation
Ensures alignment of GST 2A and 2B data, verifying the eligibility of credits and preventing reversals due to data inconsistencies.
Supplier Compliance Monitoring
Pazy tracks supplier GST compliance and ensures credits are only claimed from suppliers with accurate and up-to-date filings.
Real-Time Error Alerts
Delivers instant alerts for discrepancies or errors in GST data, enabling prompt corrections to prevent incorrect ITC claims.
Error-Free ITC Calculations
Pazy guarantees precise ITC calculations, minimizing the risk of ineligible credit claims and ensuring compliance.
Pazy simplifies GST reconciliation for SMBs, improving compliance and cash flow. Integrating with accounting tools simplifies processes for finance teams and enhances audit readiness. Industry-specific businesses and startups benefit from efficient ITC management, ensuring compliance and supporting growth.
Ensure precision and timeliness in your ITC processes with Pazy. Contact us today to learn more!
Conclusion
The reversal of Input Tax Credit is a crucial aspect of GST compliance. Mismanagement of ITC reversals can result in financial penalties, increased tax liabilities, and operational disruptions. By understanding the rules, following the required conditions, and utilizing reliable software like Pazy, businesses can ensure smooth and efficient GST compliance.
Pazy is an ideal solution for the reversal of Input Tax Credit, offering automated GST reconciliation that ensures accuracy and compliance. Its intelligent automation identifies ineligible credits and ensures timely adjustments, simplifying the process. With features like supplier compliance tracking and real-time monitoring, Pazy effectively manages ITC reversals.
Transform your GST compliance journey with Pazy. Experience error-free ITC reversals and seamless return filing. Schedule a Free Demo today to discover how Pazy can optimize your compliance process!
FAQs
1. Is ITC reversal applicable to both registered and unregistered suppliers?
Yes, ITC reversal applies to both registered and unregistered suppliers, provided the GSTIN is valid and accurately recorded.
2. Can ITC be reversed if the business changes its nature of supply (from taxable to exempt or vice versa)?
Yes, ITC must be reversed on inputs used for taxable supplies that are now utilized for exempt supplies.
3. How does the ITC reversal process differ for casual and non-resident taxable persons?
Casual and non-resident taxable persons have specific provisions for ITC reversal, primarily for supplies used in non-business or exempt activities, which differ from regular GST-registered businesses.
4. Can ITC be reversed on assets that have been written off or destroyed?
Yes, ITC must be reversed on assets that are written off or destroyed based on their remaining useful life.
Understanding Reversal of Input Tax Credit under GST Rules
Dec 16, 2024
Pratik Chhajed
The Goods and Services Tax (GST) system is an integrated approach in India that simplifies taxation. Among its many features, Input Tax Credit (ITC) serves as a key element, allowing businesses to claim credits for taxes paid on inputs used in the supply of goods or services. However, the concept of ITC also includes the provision of its reversal under specific circumstances.
This blog focuses on the reversal of Input Tax Credit, with its regulations, consequences, and compliance requirements. Businesses need to understand these requirements to comply with GST laws and avoid potential penalties.
Concepts of Input Tax Credit
Input Tax Credit allows businesses to offset tax paid on inputs against output tax liability, ensuring taxes are applied only on value added. ITC reversal occurs under conditions like non-payment to suppliers, use of inputs for exempt supplies, or non-business use. Understanding these conditions is essential for compliance and accurate tax filings.
1. Role of Input Tax Credit
The ITC allows businesses to reduce their tax liability by claiming credits for the GST paid on purchases that are used to produce taxable goods or services. It helps reduce tax burdens, leading to more efficient operations and cost savings. However, ITC is subject to specific conditions, and its reversal occurs when businesses fail to meet these conditions, resulting in the reversal of previously availed credits. In this blog, we will discuss various conditions under which ITC reversal takes place.
2. Reason for Reversal of Input Tax Credit under GST
Reversal of Input Tax Credit under GST allows businesses to claim credits only for eligible business activities, preventing misuse of the tax system. It ensures compliance when goods or services transition to exempt or non-taxable categories and protects government revenue through proper credit adjustments.
3. Impact of ITC Reversal
Reversing Input Tax Credit directly increases a business's output tax liability. As a result, the reversed credit amount must be repaid, which may include interest if there are delays in compliance. Inaccurate ITC reversal can lead to penalties, legal consequences, and reputational damage.
To minimize these risks, businesses need to understand the rules governing ITC reversals and comply with the GST regulations.
Key Rules Governing ITC Reversal
Reversal of Input Tax Credit is essential to ensure compliance with GST regulations and effective tax management. The following CGST rules outline the conditions for ITC reversal:
Rule 37: ITC must be reversed if the supplier does not pay tax within 180 days from the invoice date, ensuring credits are not claimed when tax payment is pending.
Rule 38: This rule mandates the reversal of ITC claims on ineligible goods or services, such as personal expenses or blocked credits, ensuring only legitimate business-related inputs benefit from ITC.
Rule 42: Governs the apportionment and reversal of credit on common inputs used for taxable and exempted supplies, mandating the reversal of proportionate ITC on exempted goods or services.
Rule 43: Applies to capital goods used for taxable and exempt supplies, requiring proportional reversal based on the exempt supply ratio over the asset's useful life.
Rule 44: Governs ITC reversals when supplies transition to non-taxable or exempt categories and ensures proper tax adjustments are made.
Rule 45: ITC on goods or services used for construction or development of immovable property must be reversed when not directly used for taxable supplies.
Rule 46: ITC on inputs used for manufacturing exempt products or services should be reversed when the exempt supply exceeds the taxable supply.
Rule 47: ITC claimed on inputs for personal use must be reversed, ensuring credits are linked to taxable business activities.
Rule 48: In case of cessation or discontinuation of business, ITC on goods held in stock must be reversed, ensuring no undue tax advantage is retained.
Rule 49: A registered person opting for the composition scheme must reverse the ITC on goods in stock at the time of opting in, in accordance with the simplified taxation method.
These rules ensure businesses comply with ITC eligibility, preventing misuse or excessive claims under the GST regulations. Understanding these rules is essential, as the next step involves identifying the specific conditions that necessitate ITC reversal.
Conditions Requiring ITC Reversal
Under the GST regime in India, the Central Goods and Services Tax Act 2017 outlines the circumstances in which Input Tax Credit may be reversed:
Non-payment of Tax: If the supplier fails to pay tax on the supply within the prescribed time, ITC claimed by the recipient will be reversed.
Non-Business Purposes: ITC is not available for goods or services used for personal or non-business activities.
Depreciation Claim: If depreciation is claimed on the tax component of capital goods, the ITC for that portion is reversed.
Mismatch in GSTR-2A and GSTR-3B: If the ITC claimed in GSTR-3B does not match the details in GSTR-2A (or 2B), ITC will be reversed.
Return of Goods: If goods are returned, the ITC claimed on those goods must be reversed.
Non-compliance by Supplier: If the supplier has not filed GST returns or paid taxes, the ITC claimed by the recipient must be reversed.
Ineligible Goods or Services: ITC is not available on certain goods and services (e.g., motor vehicles, food and beverages, personal use items). If incorrectly claimed, it must be reversed.
Change in GST Registration Status: If a person becomes unregistered or switches to a different tax scheme, ITC may be reversed.
Cancellation of Registration: Upon cancellation of GST registration, ITC on remaining stocks and unutilized capital goods must be reversed.
Ineligible Exempt Supplies: ITC used for exempt or non-GST supplies will be reversed.
Stay ahead of GST compliance requirements with Pazy's seamless ITC reversal tracking features. Contact us for more details!
Each of these situations demands careful compliance to avoid errors in tax filings, thus understanding how to calculate ITC reversal under GST rules is important.
Calculation of Input Tax Credit Reversal
ITC reversal is required in scenarios like non-payment of GST by the supplier, exempt goods/services or common credit used for both taxable and exempt supplies. Failure to reverse ITC on time results in an 18% annual interest on the overdue amount. Thus, making timely reversals is essential to avoid penalties. The following are the formulas for ITC reversal based on different scenarios.
1. Non-payment of GST by Supplier
If a supplier fails to pay GST on the supplied goods or services, the buyer must reverse the ITC claimed on those purchases. The reversal is calculated using the following formula.
Reversed ITC=Input Tax Credit Claimed × (Period of DefaultTotal Period)
Example: If the buyer claimed ₹50,000 as ITC on a purchase, and the supplier failed to pay GST for 2 months out of 12 months, the ITC reversal would be calculated proportionately. As a result, the buyer must reverse ₹8,333 of the claimed ITC.
2. Exempted Goods/Services
When inputs are used to produce exempt goods or services, ITC must be reversed proportionally based on the ratio of exempt supplies to total supplies.
Reversal of ITC=Total ITC on Inputs × Value of Exempted Goods/ServicesTotal Value of Goods/Services Supplied (Taxable + Exempted)
Example: If the total ITC claimed on inputs is ₹100,000, the value of exempt supplies is ₹300,000, and the total supplies (taxable + exempt) is ₹1,000,000. The ITC reversal will amount to ₹30,000.
3. Reversal Under Rule 42 and Rule 43
Reversal is not required if the inputs are used only for taxable supplies. However, if the inputs are used for both taxable and exempt supplies, a proportional ITC reversal is required. The reversal is calculated using the following formula:
ITC Reversal=ITC on Inputs × Exempt Supplies ValueTotal Supplies Value
Example: If the total ITC on inputs is ₹60,000, the value of exempt supplies is ₹200,000, and the total supplies are ₹500,000, then reversed ITC would be ₹24,000.
Meanwhile the ITC reversal for capital goods is calculated over a period (typically 5 years) based on their use for taxable versus exempt purposes. The Central Board of Indirect Taxes & Customs guidelines specify that this reversal is governed by Rule 42 and Rule 43 of the GST Rules.
4. Non-Business Usage
If office computers are used for personal purposes, the ITC claims must be reversed proportionately.
Reversed ITC=ITC Claimed on the Asset × Percentage of Personal Use
Example: For ₹50,000 ITC claimed on office computers, if 20% is used personally, then the reversed ITC would be ₹10,000.
Simplify your ITC reversal process with Pazy. Partner with us today to optimize your ITC claims, ensure compliance, and minimize errors.
Once the ITC reversal is calculated, it is essential to fulfill the reporting requirements to ensure transparency and accurate tax filings under GST regulations.
Reporting Requirements for ITC Reversal
ITC reversal reporting is a crucial part of GST compliance and ensures that businesses maintain accurate records for tax purposes.
1. Reporting ITC Reversal in GSTR-3B and GSTR-9
ITC reversals must be reported in Form GSTR-3B, which is filed on a monthly or quarterly basis. Additionally, any necessary adjustments or disclosures related to ITC reversals should be made in Form GSTR-9, the annual return.
2. Impact on Electronic Credit Ledger
ITC reversals directly impact the Electronic Credit Ledger by decreasing the available credit, which may affect future tax payments and compliance.
3. Importance of Accurate and Timely Reporting
Accurate and timely reporting ensures compliance, minimizes discrepancies between filings, and reduces the risk of inspection by tax authorities.
While businesses may have robust systems in place, challenges in ITC reversal compliance are common. Let's examine these challenges and explore practical solutions.
Challenges and Solutions
1. Issues in ITC Reversal Compliance
Businesses often encounter challenges such as misclassification of taxable and exempt supplies, errors in calculating proportionate reversals, and failure to reverse ITC within the prescribed timelines. These challenges can lead to non-compliance and may result in penalties.
2. Tips for Maintaining Accurate Records
Businesses should maintain detailed records of both taxable and exempt transactions and regularly reconcile ITC claims with supplier invoices. This helps in avoiding discrepancies and facilitates smooth compliance with GST regulations.
3. Advisory on Timely Reversals to Avoid Penalties
Adopting GST-compliant software ensures timely ITC reversals and reduces the risk of penalties or interest due to delays or errors.
Feeling overwhelmed by the challenges of ITC reversal? Let Pazy be your trusted partner in simplifying the ITC reversal process. With Pazy's automation, you can easily manage reversals, avoid errors, and ensure compliance.
Before you make a decision, let's take a closer look at how Pazy optimizes ITC reversal under GST rules.
Simplify Reversal of Input Tax Credit with Pazy
Pazy simplifies the reversal of Input Tax Credit by automating the identification and adjustment of ineligible credits, ensuring compliance with tax regulations. Our two-way integration with your accounting system schedules auto-reconciliations of GST data and syncs vendor payment decisions, running thrice a day to maintain accuracy and minimize errors.
Automated GST Reconciliation
Pazy ensures accurate reconciliation of GST data with accounting records, automatically identifying discrepancies that may impact ITC claims.
2A/2B Reconciliation
Ensures alignment of GST 2A and 2B data, verifying the eligibility of credits and preventing reversals due to data inconsistencies.
Supplier Compliance Monitoring
Pazy tracks supplier GST compliance and ensures credits are only claimed from suppliers with accurate and up-to-date filings.
Real-Time Error Alerts
Delivers instant alerts for discrepancies or errors in GST data, enabling prompt corrections to prevent incorrect ITC claims.
Error-Free ITC Calculations
Pazy guarantees precise ITC calculations, minimizing the risk of ineligible credit claims and ensuring compliance.
Pazy simplifies GST reconciliation for SMBs, improving compliance and cash flow. Integrating with accounting tools simplifies processes for finance teams and enhances audit readiness. Industry-specific businesses and startups benefit from efficient ITC management, ensuring compliance and supporting growth.
Ensure precision and timeliness in your ITC processes with Pazy. Contact us today to learn more!
Conclusion
The reversal of Input Tax Credit is a crucial aspect of GST compliance. Mismanagement of ITC reversals can result in financial penalties, increased tax liabilities, and operational disruptions. By understanding the rules, following the required conditions, and utilizing reliable software like Pazy, businesses can ensure smooth and efficient GST compliance.
Pazy is an ideal solution for the reversal of Input Tax Credit, offering automated GST reconciliation that ensures accuracy and compliance. Its intelligent automation identifies ineligible credits and ensures timely adjustments, simplifying the process. With features like supplier compliance tracking and real-time monitoring, Pazy effectively manages ITC reversals.
Transform your GST compliance journey with Pazy. Experience error-free ITC reversals and seamless return filing. Schedule a Free Demo today to discover how Pazy can optimize your compliance process!
FAQs
1. Is ITC reversal applicable to both registered and unregistered suppliers?
Yes, ITC reversal applies to both registered and unregistered suppliers, provided the GSTIN is valid and accurately recorded.
2. Can ITC be reversed if the business changes its nature of supply (from taxable to exempt or vice versa)?
Yes, ITC must be reversed on inputs used for taxable supplies that are now utilized for exempt supplies.
3. How does the ITC reversal process differ for casual and non-resident taxable persons?
Casual and non-resident taxable persons have specific provisions for ITC reversal, primarily for supplies used in non-business or exempt activities, which differ from regular GST-registered businesses.
4. Can ITC be reversed on assets that have been written off or destroyed?
Yes, ITC must be reversed on assets that are written off or destroyed based on their remaining useful life.