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CS Professional · Goods and Services Tax (GST) and Corporate Tax Planning · Input Tax Credit and Computation of GST Liability

Ravi Pvt Ltd reversed credit of Rs 18,000 under Section 41(2) because its supplier had not paid the tax. Later the supplier pays the tax on those supplies. What is Ravi Pvt Ltd's position under the proviso to Section 41(2)?

Ravi Pvt Ltd may re-avail the full Rs 18,000 in the prescribed manner once the supplier pays the tax. The proviso to Section 41(2) permits re-availment of reversed credit when the supplier's payment is made.

  1. AIt may re-avail the reversed credit in the prescribed mannerCorrect
  2. BIt can never re-avail the credit once reversed
  3. CIt may re-avail only after filing the annual return
  4. DIt may re-avail only half of the reversed amount

Explanation

The proviso to Section 41(2) says that where the supplier pays the tax payable on the supplies, the recipient may re-avail the credit reversed, in the prescribed manner. The full amount is allowed, with no half limit and no annual return requirement stated.

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