Find
When you move from regular to composition, you must pay back ITC on inputs in stock, semi-finished and finished goods and capital goods held on the day before composition starts. This is reported in ITC-03 within 60 days.
GST
Reversing ITC on stock when moving to composition
Updated . Every paid answer is checked by a CA. Free AI answers are labelled until a CA verifies them.
Provisions
Rule 3, CGST Rules 2017; Sec 18(4), CGST Act 2017
Analysis
Example: on 31 March you hold stock worth Rs 8 lakh on which you took Rs 1.44 lakh ITC. File ITC-03 by end May and pay Rs 1.44 lakh from the credit ledger balance, or in cash if the ledger is short. Any leftover credit in the ledger then lapses. For capital goods, the reversal is reduced by 5 percentage points per quarter of use.
Close
- Take a stock count as on 31 March
- Compute ITC taken on stock and capital goods
- File ITC-03 within 60 days
- Pay the amount from the credit or cash ledger
Connect now
A Savvy replies in minutes.
Fixed price before you pay. Your Savvy is paid only after you accept the work.
General guidance from TaxSavvy’s library of money processes. Laws change; your Savvy confirms the answer on your exact case before anything is filed.