Section 42 – Matching, Reversal and Re-claim of ITC
Section 42 of CGST Act, 2017 – Matching, Reversal and Re-claim of Input Tax Credit Updated on: February 2026 (as applicable till date) Prepared by: Yours Tax Consultant 1. Introduction to Section 42 Section 42 was originally introduced to provide a system-driven mechanism for matching Input Tax Credit (ITC) claimed by recipients with tax paid by suppliers. However, due to practical difficulties, the matching mechanism envisaged under Sections 42 and 43 has not been implemented. 2. Legislative Intent of Section 42 The intent behind Section 42 was to: Ensure one-to-one matching of ITC Prevent wrongful availment of credit Create an automated compliance ecosystem This was to be achieved through system-based comparison of supplier and recipient returns. 3. Statutory Framework (Original Scheme) As per the original provisions: ITC claimed by recipient would be matched Mismatch would be communicated to both parties Unresolved mismatch wo...