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mediumTax Consultant interview question

In which situations does a business have to reverse GST input tax credit, and how do you manage them?

What the interviewer wants to hear

  • Non-payment to supplier within 180 days
  • Credit relating to exempt supplies or personal use
  • Credit notes received from suppliers
  • Goods lost, stolen, destroyed or given as free samples
  • Tracks with reconciliations and reports in GSTR-3B

Model answer

Several common situations require reversal. If the business does not pay the supplier, value plus tax, within 180 days of the invoice date, the credit must be reversed with interest and can be re-claimed after payment. Where inputs or services are used partly for exempt supplies or non-business purposes, common credit is apportioned under Rules 42 and 43, with an annual true-up. When a supplier issues a credit note reducing tax, the recipient must reduce its credit. Goods that are lost, stolen, destroyed, written off or given away as free samples also require reversal of related credit. Blocked items wrongly claimed must be reversed too. I manage this with monthly checks: a payables ageing report flagged for 180 days, a stock write-off register, the credit note list from GSTR-2B, and a turnover split for apportionment. Reversals are reported in the right table of GSTR-3B, and I keep working papers for the annual return and audits.

Can you answer it under time pressure?

Take a timed medium round and get scored on every answer.

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