Income Tax 24 October 2026
GSTAT Orders Segregation for ITC Reversal Demands
The Lucknow Bench of the Goods and Services Tax Appellate Tribunal ruled that any demand to reverse Input Tax Credit under Rules 42 and 43 cannot be confirmed unless the taxpayer distinctly separates specific credit from common credit. This clarification tightens compliance requirements, ensuring that only the appropriate portion of credit is subject to reversal, and sets a precedent for future ITC disputes across India.
GSTAT Clarifies ITC Reversal Process
- The Lucknow Bench held that reversal demands under GST Rules 42 and 43 must segregate *specific* and *common* credit before approval.
- Taxpayers now need to identify and separate the two categories of credit in their filings, preventing blanket reversals.
- The order reinforces strict compliance and aims to reduce disputes by ensuring only eligible credit is reversed.
For full details, see the Taxscan article.
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