What is GSTR-3B and when is it due?

GSTR-3B is a monthly self-declared summary GST return. For regular taxpayers, it is due by the 20th of the following month. Late filing attracts ₹50/day late fee (₹25 CGST + ₹25 SGST), capped at ₹5,000.

How do I reply to a DRC-01 GST notice?

DRC-01 is a show-cause notice for tax demand. Log in to GST portal, go to Services > User Services > View Additional Notices, select the notice and file a reply within 30 days — either agreeing and paying, or disputing with supporting documents.

What is the late fee for filing GSTR-1 late?

Late fee for GSTR-1 is ₹50/day (₹25 CGST + ₹25 SGST). For nil returns it is ₹20/day. Maximum cap is ₹10,000 per return. GSTR-1 is due by the 11th of each month for monthly filers.

Can I claim ITC on hotel and restaurant bills?

ITC on restaurant food and beverages is blocked under Section 17(5) CGST Act — not claimable. However, ITC on hotel accommodation is allowed if used for business purposes and the hotel provides a GST invoice with your GSTIN.

What is the GST registration threshold in India?

GST registration is mandatory if annual aggregate turnover exceeds ₹40 lakhs for goods (₹20 lakhs for special category states) or ₹20 lakhs for services (₹10 lakhs for special category states). E-commerce sellers must register regardless of turnover.

Rule 42 and Rule 43 ITC Reversal: Calculation Method with Examples

sai krishna
Jun 7
2 min read

Rule 42 and Rule 43 of the CGST Rules require proportionate reversal of ITC when a taxpayer makes both taxable and exempt supplies, or uses inputs for both business and personal purposes.

When Does Rule 42 Apply?

Rule 42 applies to ITC on inputs and input services. It applies when: - You make both taxable and exempt supplies - You use inputs partly for business and partly for non-business purposes - You supply goods/services covered under Section 17(5) (blocked ITC)

Rule 42 Calculation (Step by Step)

Step 1: Identify total ITC claimed during the month (T) Step 2: Identify ITC directly attributable to taxable supplies (T1) Step 3: Identify ITC directly attributable to exempt supplies (T2) Step 4: Identify blocked ITC under Section 17(5) (T3) Step 5: Calculate common ITC: C1 = T - T1 - T2 - T3 Step 6: Calculate reversal: D1 = C1 × (Exempt turnover / Total turnover) Step 7: Net ITC = C1 - D1

Practical Example

Total ITC for April: ₹10,00,000 ITC for taxable supplies: ₹6,00,000 ITC for exempt supplies: ₹1,00,000 Blocked ITC (17(5)): ₹50,000 Common ITC (C1): ₹2,50,000 Exempt turnover: ₹20 lakhs | Total turnover: ₹1 crore Reversal (D1): ₹2,50,000 × (20/100) = ₹50,000 Net eligible ITC from common pool: ₹2,00,000

When Does Rule 43 Apply?

Rule 43 applies to ITC on capital goods. The reversal is calculated over 60 months (the useful life of capital goods as per GST rules). The formula is similar but spread across the life of the asset.

Annual Reconciliation (September Return / GSTR-9)

Rule 42 reversal must be reconciled annually. If the provisional reversal during the year was higher than actual, you can reclaim the excess in the September return of the following year. If it was lower, you must reverse the additional amount with interest.

Common Mistakes to Avoid

- Forgetting to include exempt supply turnover correctly (nil-rated + exempt + non-GST) - Not tracking Rule 42 reversal month-by-month - Ignoring capital goods reversal under Rule 43 - Missing annual reconciliation deadline

Disclaimer: Consult your CA for case-specific advice.