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Unutilised GST ITC Cannot Attract Tax: Madras HC
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Madras High Courttax

Unutilised GST ITC Cannot Attract Tax: Madras HC

July 27, 2026

The Madras High Court clarified that merely reflecting unutilised GST Input Tax Credit (ITC) in GSTR-2A/2B does not lead to tax imposition unless such credit is actually used.

Tax and Interest Cannot Be Levied on Unutilised GST ITC

The Madras High Court has ruled that tax and interest cannot be levied on unutilised GST Input Tax Credit (ITC) merely reflected in the GSTR-2A or 2B. The ruling clarifies that the mere presence of ITC in auto-populated statements does not confer any tax advantage to the taxpayers if the credit is unutilised.

This decision hinges on the interpretation of the provisions concerning GST and clarifies that actionable claims must be accompanied by actual utilisation of credits for tax computations.

For legal practitioners, this ruling is key in advising clients on their GST compliance, particularly in ensuring that they are not unjustly held liable for tax on unutilised credits. This decision underscores the importance of correctly interpreting the GST framework.

Citations

  • Madras HC (2026) 2 CTC 145
Practice Areas:tax

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