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GST Rule 42 & 43 ITC Reversal Calculator

See the GST credit to reverse each month under Rules 42 and 43, the credit you keep, and the annual true-up.

Reviewed by CA Apurav GargUpdated Calculated in your browser; copied links include your figures

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Calculator

Note:
Example values — replace with yours.

ITC on inputs and input services this period

Adds the D2 reversal of 5% of common credit under Rule 42(1)(j).

Turnover in the State

Illustrative default 0 — replace with your own. Part of F, not of E: exports are zero-rated (section 16, IGST Act), not exempt, so they keep your common ITC.

Advanced options

The figures below start with illustrative defaults — replace them with your own data.

Left out of both E and F, as Explanation 1 to Rule 43 requires. Enter it only to see the ITC this keeps.

The D2 switch above applies the 5% non-business reversal; leave it off when common inputs are used only for business.

Capital goods used in common (Rule 43) · 1 changed

Spread over 60 months; this month’s share is reversed in the exempt ratio.

Annual true-up (Rule 42(2)) · 1 changed

Leave blank to skip the true-up. Enter the year’s figures above, not one month’s.

From 1 April after the year ends to the date you pay.

Illustrative: for example 20 October. When filled in, the days of interest are counted from 1 April to this date instead.

Your result

Reverse in GSTR-3B Table 4(B)(1)

₹61,200.00

Exempt turnover is 20.0% of the State’s turnover, so that share of the ₹3,00,000.00 common credit, and of this month’s capital-goods credit, is reversed.

Eligible ITC kept
₹8,60,000
Exempt share
20.0%
True-up shortfall
₹15,000
How the reversal is worked out
StepAmount
C1: ITC left after non-business, exempt-only and blocked credit₹9,20,000.00
C2: common credit (C1 less credit used only for taxable supplies)₹3,00,000.00
D1: exempt share (20.0% of C2)₹60,000.00
D2: non-business share (not applied)₹0.00
Te: exempt share of this month’s capital-goods credit₹1,200.00
Reverse in GSTR-3B Table 4(B)(1)₹61,200.00
C3: common credit you keep₹2,40,000.00
Eligible input and input-service ITC (taxable-only + C3)₹8,60,000.00
GSTR-3B Table 4 filing map
TableAmount
Table 4(A)(5): all other ITC (T)₹10,00,000.00
Table 4(B)(1): non-business, exempt-only and section 17(5) credit (T1 + T2 + T3)₹80,000.00
Table 4(B)(1): Rule 42 / 43 reversal (D1 + D2 + Te)₹61,200.00
Table 4(B)(1) total₹1,41,200.00
Table 4(C): net ITC available₹8,58,800.00

Assumes T1, T2 and T3 are shown in Table 4(A)(5) and reversed in Table 4(B)(1). Capital-goods credit claimed this month is not included in T.

Annual true-up
ItemAmount
D1 + D2 for the year₹60,000.00
Already reversed₹45,000.00
Shortfall to reverse₹15,000.00
Interest at 18% a year for 203 days₹1,501.64

What this tells you

If you make both taxable and exempt supplies in a State, the credit on inputs and services used for both cannot all be kept. Rules 42 and 43 decide how much to reverse each month, in proportion to exempt turnover.

Enter the period’s ITC split by use and the State’s turnover to see the amount to reverse in GSTR-3B Table 4(B)(1), the credit you keep, and the annual true-up with interest on any shortfall.

Assumptions used

  • Figures are for one GSTIN (one State) and one tax period, except the true-up, which uses the year’s figures.
  • Exempt turnover follows the definition used in Rule 42; check what your business includes in it.
  • Zero-rated exports and SEZ supplies are part of total turnover (F) and not of exempt turnover (E). Bank FD and loan interest is left out of both (Explanation 1 to Rule 43). Both new fields start at an illustrative ₹0. As on 2 November 2026.
  • The Table 4 map assumes non-business, exempt-only and blocked credit (T1, T2, T3) is shown in Table 4(A)(5) and reversed in Table 4(B)(1).
  • The non-business share (D2) is 5% of common credit, applied only if you turn it on.
  • Common capital goods are spread over 60 months; only goods still within that life are entered.
  • Figures are rounded for display only; the working uses exact values.
Legal references and sources
Rule 42 / 43 common credit reversal
Section 17(2), CGST Act, 2017 read with Rules 42 and 43, CGST Rules, 2017 — common credit C2 = T − (T1 + T2 + T3 + T4); exempt reversal D1 = (E ÷ F) × C2; non-business reversal D2 = 5% of C2 (where applicable under Rule 42(1)(j)); capital goods monthly common credit Tm = Tc ÷ 60 and exempt share Te = (E ÷ F) × Tm.
Last verified 27 Oct 2026
GST interest and GSTR-3B late fee
Section 50(1), Section 50(3) and Section 47, CGST Act, 2017 read with Rule 88B, CGST Rules, 2017 and Notification No. 13/2017–Central Tax as amended by Notification No. 9/2022–Central Tax dated 5 July 2022.
Last verified 27 Oct 2026

How this is calculated

  1. C1 = T − (T1 + T2 + T3). C2 (common credit) = C1 − T4.
  2. D1 = C2 × exempt turnover ÷ total turnover. D2 = C2 × 5% if it applies.
  3. C3 (common credit kept) = C2 − D1 − D2.
  4. Rule 43: Tm = Tc ÷ 60 months; Te = Tm × exempt turnover ÷ total turnover.
  5. Table 4(B)(1) reversal = D1 + D2 + Te. Eligible input and input-service ITC = T4 + C3.
  6. True-up: difference = the year’s D1 + D2 − already reversed; interest = shortfall × 18% × days ÷ 365. With a reversal date, days run from 1 April to that date.
  7. GSTR-3B: Table 4(A)(5) = T; Table 4(B)(1) = T1 + T2 + T3 + D1 + D2 + Te; Table 4(C) = 4(A)(5) − 4(B)(1).
  8. ITC kept by zero-rating = C2 × exports ÷ F. ITC kept by leaving out FD interest = C2 × (E + interest) ÷ (F + interest) − D1.

Terms used here

Worked examples

Example: ₹10,00,000 of ITC, exempt turnover 20.0%

Exempt-only ITC ₹50,000, blocked ₹30,000, taxable-only ₹6,20,000; exempt turnover ₹40,00,000 of ₹2,00,00,000; common capital goods ₹3,60,000.

  • C1 ₹9,20,000.00, C2 ₹3,00,000.00, D1 ₹60,000.00, C3 ₹2,40,000.00.
  • Capital goods: Tm ₹6,000.00, Te ₹1,200.00.
  • Reverse ₹61,200.00 in Table 4(B)(1); eligible ITC ₹8,60,000.00.
  • With the non-business share: D2 ₹15,000.00, C3 ₹2,25,000.00.
  • True-up with ₹45,000 already reversed: shortfall ₹15,000.00, interest for 203 days ₹1,501.64.

Example 2: exports and FD interest kept out of exempt turnover

Common credit ₹2,00,000; domestic taxable turnover ₹60,00,000, zero-rated exports ₹20,00,000 and exempt ₹20,00,000, so F = ₹1,00,00,000; ₹5,00,000 of FD interest left out; no D2.

  • Exempt share 20.0%: D1 ₹40,000.00, D2 ₹0.00, C3 ₹1,60,000.00.
  • ITC kept: ₹40,000.00 by not treating exports as exempt, ₹7,619.05 by leaving FD interest out.
  • GSTR-3B: Table 4(A)(5) ₹2,00,000.00, Table 4(B)(1) ₹40,000.00, Table 4(C) ₹1,60,000.00.

Our GST Refunds & APOB work includes monthly and annual Rule 42 / 43 working papers for brands with exempt supplies.

Questions sellers ask

When do Rules 42 and 43 apply?

When the same inputs, services or capital goods are used for both taxable and exempt supplies (or partly for non-business purposes). A brand that sells some exempt goods reverses a share of its common credit each month. Interest on deposits and loans is left out of exempt and total turnover, and zero-rated exports count as taxable, not exempt.

Where is the reversal shown?

In GSTR-3B Table 4(B)(1), as ITC reversed under Rules 38, 42 and 43. The monthly figure is worked out on that month’s turnover, then trued up for the whole year.

What is the annual true-up?

Rule 42(2) recomputes D1 and D2 on the full year’s turnover. A shortfall against the monthly reversals is reversed by the return for September after the year ends, with interest at 18% a year from 1 April; an excess can be claimed back.

What is the D2 non-business reversal?

Where common inputs and services are also used partly for non-business purposes, 5% of the common credit is treated as non-business and reversed, in addition to the exempt share. Leave it off if that does not apply.

How are capital goods handled?

Credit on capital goods used in common is spread over a useful life of 60 months. Each month, that month’s share is reversed in the same exempt-turnover ratio (Rule 43).

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Disclaimer

An estimate for general information only, based on the figures you enter. Whether a supply is exempt, and what counts in exempt turnover, depends on your facts; this is not advice on your GST position.

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