42. Matching, reversal and reclaim of input tax credit.—
(1) The details of every inward supply furnished by a
registered person (hereafter in this section referred to as the ―recipient‖) for a tax period shall, in such manner and
within such time as may be prescribed, be matched––
(a) with the corresponding details of outward supply furnished by the corresponding registered person (hereafter
in this section referred to as the ―supplier‖) in his valid return for the same tax period or any preceding tax period;
(b) with the integrated goods and services tax paid undersection 3 of the Customs Tariff Act, 1975 in respect of
goods imported by him; and
(c) for duplication of claims of input tax credit.
(2) The claim of input tax credit in respect of invoices or debit notes relating to inward supply that match with the
details of corresponding outward supply or with the integrated goods and services tax paid under section 3 of the
Customs Tariff Act, 1975 in respect of goods imported by him shall be finally accepted and such acceptance shall be
communicated, in such manner as may be prescribed, to the recipient.
(3) Where the input tax credit claimed by a recipient in respect of an inward supply is in excess of the tax declared
by the supplier for the same supply or the outward supply is not declared by the supplier in his valid returns, the
discrepancy shall be communicated to both such persons in such manner as may be prescribed.
(4) The duplication of claims of input tax credit shall be communicated to the recipient in such manner as may be
(5) The amount in respect of which any discrepancy is communicated under sub-section (3) and which is not
rectified by the supplier in his valid return for the month in which discrepancy is communicated shall be added to the
output tax liability of the recipient, in such manner as may be prescribed, in his return for the month succeeding the
month in which the discrepancy is communicated.
(6) The amount claimed as input tax credit that is found to be in excess on account of duplication of claims shall
be added to the output tax liability of the recipient in his return for the month in which the duplication is communicated.
(7) The recipient shall be eligible to reduce, from his output tax liability, the amount added under sub-section (5),
if the supplier declares the details of the invoice or debit note in his valid return within the time specified in subsection (9) of section 39.
(8) A recipient in whose output tax liability any amount has been added under sub-section (5) or sub-section (6),
shall be liable to pay interest at the rate specified under sub-section (1) of section 50 on the amount so added from the
date of availing of credit till the corresponding additions are made under the said sub-sections.
(9) Where any reduction in output tax liability is accepted under sub-section (7), the interest paid under sub-section
(8) shall be refunded to the recipient by crediting the amount in the corresponding head of his electronic cash ledger
in such manner as may be prescribed:
Provided that the amount of interest to be credited in any case shall not exceed the amount of interest paid by the
(10) The amount reduced from the output tax liability in contravention of the provisions of sub-section (7) shall
be added to the output tax liability of the recipient in his return for the month in which such contravention takes place
and such recipient shall be liable to pay interest on the amount so added at the rate specified in sub-section (3) of