GSTR-9 Table 7: ITC Reversed and Ineligible ITC

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There is one rule that governs every row of this table, and getting it wrong doubles the reversal. A reversal belongs in Table 7 only if the corresponding credit was reported in Table 6B or 6H. If the credit never entered Table 6, its reversal must not enter Table 7.

Table 7 reports reversals by cause: 7A rule 37, 7A1 rule 37A, 7B rule 39, 7C rule 42, 7D rule 43, 7E section 17(5), 7F TRAN-1 reversal, 7G TRAN-2 reversal, 7H other reversals, with 7I the total and 7J "Net ITC Available for Utilization (6O − 7I)." The governing instruction: "where ITC is included in Table 6B and 6H, the same may be shown in Table 7 for the purpose of reversal… and if credit is not included, the same shall not be shown in Table 7 to avoid double reversal."

The three tests behind a reversal

The Guide frames the whole table around section 17:

"The test of disallowance shall be framed based on business facts and circumstances to ascertain restricted input tax credit —" - "the inputs, input services or capital goods are put to use for a purpose other than business (section 17(1))"; - "…are put to use for exempt supplies (section 17(2))"; - "…are those prescribed under the list of blocked input tax credit of inward supplies (section 17(5))."

And a distinction that matters more than it appears:

"ITC which is restricted can be reclaimed till the specified date if the excess reversal was made earlier or when the conditions for reclaiming the input tax credit are satisfied. However, it must be noted that ineligible credit cannot be availed once it is declared as ineligible."

Restricted credit is recoverable; ineligible credit is not. Which is why the classification between Table 7A (rule 37, recoverable on payment) and Table 7E (section 17(5), never recoverable) is a substantive decision, not a labelling one.

The rows

7A — rule 37. "Where a recipient fails to pay to the supplier the amount towards the value of supply along with tax, within a period of 180 days from the date of issue of invoice, an amount equal to the ITC availed has to be paid by the recipient along with interest payable under section 50. Further, recipient would be entitled to re-avail such ITC on payment made by him to the supplier."

7A1 — rule 37A. "reversal of ITC on account of non-payment of tax by the supplier."

The two are opposite failures. Rule 37 is the recipient's failure to pay the supplier; rule 37A is the supplier's failure to pay the Government. Both take the recipient's credit away; both allow it back when the underlying default is cured.

7B — rule 39. "any ITC required to be reduced on account of issuance of a credit note to the input service distributor by the supplier shall be apportioned to each recipient in the same ratio in which the ITC contained in the original invoice was distributed."

Based on "the input service distributor credit note, issued… as prescribed in sub-rule (1) of rule 54", and on the fact that "Eligible ITC and ineligible ITC are separately distributed by the input service distributor" — in common parlance, separate invoices for each. ISD and rule 39 →

7C — rule 42 and 7D — rule 43. "Any reversal of common ITC related to inputs or input services in proportion to value of non-taxable/exempt supplies… in Table 7C"; "common ITC pertaining to capital goods… in Table 7D."

And the Guide names the commonest error in the sector: "A most common error… is the wrong classification of supply into taxable and exempt supply. The scope of exempt supply is wide enough to cover non-taxable supply along with exempt supply… Other income lying in the profit and loss account may contain some exempt income and accordingly, ITC reversal calculation is required at every tax period."

Interest income, dividend, sale of securities and land sit in "other income" and are the classic missed items. Rule 42 worked through →

7E — section 17(5). "The amount of ITC which is ineligible… has to be reversed the credit is taken and the amount is shown in Form GSTR-3B. The reversal… is also shown in Table 4(B)(1) of Form GSTR-3B and the same must be bifurcated and reported here if it is shown along with any other provisions in the monthly return."

7F and 7G — TRAN-1 and TRAN-2 reversals. Where transitional credit "has been reversed due to any reason during the financial year."

7H — other reversals. "If ITC has been reversed due to any reason other than Table 7A to 7E, the same is to be reported under Table 7H only. For example, any ITC reversed through Form GST ITC-03 is to be reported in Table 7H as there is no specific table."

ITC-03 is the composition and exemption exit form — reversal of credit on stock when a registered person opts into composition or the supply becomes wholly exempt.

The consolidation option, and the two rows it never covered

"for FY 2017-18, 2018-19, 2019-20, 2020-21, 2021-22 & 2022-23, registered persons have an option to report the amount of reversal either separately in Table 7A to 7E or to report entire amount of reversal under Table 7H only (except Form GST TRAN-01 and TRAN-02 related reversal). Reversal on account of Form GST TRAN-01 and TRAN-02 credit are to be mandatorily reported."

Transitional credit was always ring-fenced, in Table 6 and Table 7 alike — the one credit stream the Government never allowed to be merged into an aggregate.

Three procedural rules that decide where money moves

(a) The double-reversal rule, already stated: report a reversal in Table 7 only if the credit was in Table 6B or 6H.

(b) Utilised ineligible credit must be paid in cash. "Where ineligible credits are found to be availed in Form GSTR-3B and are now accepted to be reversed, the registered person may identify whether such ineligible credit has already been utilized or remains unutilized. Where it has been utilized, the same is to be paid in cash through Form GST DRC-03."

The distinction is between a ledger entry and a payment. Unutilised ineligible credit can simply be reversed; utilised credit has already discharged a liability, so cash must replace it.

(c) Late reversals belong in Table 12. "if it is found that input tax credit left to be reversed in Form GSTR-3B filed for the reporting financial year and reported in Form GSTR-3B filed for the subsequent financial year, would be reported in Table 12 of Form GSTR-9." Part V, Tables 12 and 13 →

And for rule 42 and 43 specifically: "The reversal required would have been done every month and then again at the end of the year. Now, at the time of filing Form GSTR-9, if any error is discovered in the amounts of such reversal or ITC is not reversed in any returns, then Form GST DRC-03 is required to be filed for the said reversal."

Key takeaways

• A reversal enters Table 7 only if the credit entered Table 6B or 6H — otherwise the reversal is counted twice.
• Restricted credit can be reclaimed until the specified date; ineligible credit, once declared, cannot.
• 7A — recipient's failure to pay the supplier in 180 days, with interest under section 50 and re-availment on payment.
• 7A1 — rule 37A, the supplier's failure to pay tax.
• 7B — rule 39, ISD credit notes apportioned in the original distribution ratio.
• 7C and 7D — rules 42 and 43; watch "other income" for unnoticed exempt turnover.
• 7E — section 17(5), bifurcated out of Table 4(B)(1) of GSTR-3B.
• 7H takes anything else, including ITC-03 reversals, which have no dedicated row.
• TRAN-1 and TRAN-2 reversals were always mandatory, even when 7A to 7E could be consolidated into 7H.
• Utilised ineligible credit must be paid in cash through DRC-03; late reversals go to Table 12.

Read next

• GSTR-9 Tables 6B to 6H: Classifying ITC Availed
• GSTR-9 Table 8A: How GSTR-2B Replaced GSTR-2A
• GSTR-9 Part V: Tables 10 to 14, the Next-Year Corrections

Disclaimer: Positions stated as on 5 September 2026, based on Form GSTR-9 and its instructions, sections 16, 17 and 50 of the CGST Act, 2017, rules 37, 37A, 39, 42, 43 and 54(1) of the CGST Rules, 2017, and Forms GST ITC-03, TRAN-1, TRAN-2 and DRC-03, as reproduced in the ICAI Technical Guide on GST Annual Return (Form GSTR-9).