Skip to content
Anuj Desai & Associates logo
GST / ITC

GST ITC on Goods Written Off in Books

A comprehensive guide on GST ITC on goods written off in books, including the mandatory reversal under Section 17(5)(h) and the documentation requirements.

15 Sept 20262 min read

Introduction

Writing off inventory in the books of accounts is a common accounting practice for obsolete, damaged, or slow-moving stock. However, from a GST perspective, writing off goods triggers a specific compliance obligation: ITC reversal under Section 17(5)(h).

This guide explains the legal framework, the reversal mechanism, and the documentation requirements.

Legal Framework: Section 17(5)(h) of the CGST Act, 2017

Blocked Credit on Written-Off Goods

Section 17(5)(h) blocks ITC on goods written off in the books of accounts. The provision applies whether the write-off is due to obsolescence, damage, expiry, or any other reason.

The Write-Off Trigger

The trigger for ITC reversal is the accounting entry reflecting the write-off, not the physical destruction of the goods. Where goods are written off, ITC must be reversed in the GSTR-3B for the period of write-off.

Reversal Mechanism

  • Identify the ITC: Determine the ITC availed on the written-off goods.
  • Calculate the Reversal: Compute the proportionate ITC to be reversed.
  • Report in GSTR-3B: Disclose the reversal in Table 4(B) of GSTR-3B.
  • Reconcile in Annual Return: Reconcile the reversal in GSTR-9 and GSTR-9C.

Documentation Required

  • Write-Off Approval: Board or management approval for the write-off.
  • Stock Records: Inventory records supporting the write-off.
  • Reversal Calculation: Computation of the ITC to be reversed.
  • GSTR-3B Disclosure: Disclosure of the reversal.
  • Audit Trail: Documentation of the accounting entry.

Best Practices

  • Reverse ITC Promptly: Reverse ITC in the GSTR-3B for the period of write-off.
  • Maintain Records: Document the write-off and the ITC reversal.
  • Conduct Regular Stock Audits: Identify slow-moving and obsolete stock.
  • Reconcile Annually: Reconcile write-offs in the annual return.
  • Seek Professional Assistance: Where the write-off is significant, seek guidance.

Conclusion

ITC on goods written off in books must be reversed under Section 17(5)(h). The trigger is the accounting entry, not physical destruction. Proper documentation and timely reversal are essential for compliance.

Writing off inventory? Anuj Desai & Associates provides expert guidance on ITC reversal and compliance. Contact us today.

Contact us:

Compliance GuideGST ITC goods written offwrite off ITCITC written off booksGST Section 17(5)(h)GST compliance IndiaGST ITC 2026GST ITC guideGST ITC consultantGST ITC lawyerGST ITC CAGST ITC expertGST ITC advisoryGST ITC procedureGST ITC lawCGST Act ITCGST ITC rulesGST ITC regulationsGST ITC instructionsGST ITC circularGST ITC notificationGST ITC updateGST ITC newsGST ITC case lawGST ITC litigationGST ITC remedyGST ITC solutionGST write off processGST write off documentsGST write off complianceGST write off certificateGST write off GSTINGST write off portalGST write off step by stepGST write off guideGST write off advisoryGST write off expertGST ITC write off reversalGST ITC book write offGST ITC inventory write offGST ITC stock write offGST ITC provision write offGST ITC write off auditGST ITC write off documentationGST ITC write off GSTR-3BGST ITC write off annual return
Share

Related insights

Work with ADA

Ready to talk to an advisor?

Book a consultation and get a clear, considered view from a team that handles audit, tax, regulatory and cross-border work under one roof.

Get Your Free Tax Health Check — Book a 30-Min ConsultationTalk to an Expert