(1) If the input tax credit of a registered dealer other than an exporter selling goods outside the territory of India determined under section 20 for any tax period exceeds the tax liability for that period, the excess input tax credit shall be set off against the tax payable under the provisions of the Central Sales Tax Act, 1956 for that period at the first instance and if any balance input tax credit is still available, the same shall be carried forward for being set off against the tax payable for subsequent tax period or periods by that dealer.

(2) The excess input tax credit after adjustment under sub-section (1), shall be carried forward as an input tax credit, to the subsequent tax period or periods, till it is fully adjusted:

Provided that no excess input tax credit for a tax period shall be carried forward exceeding a period of twenty-four months from the close of the year to which that tax period relates.

(3) Where input tax credit is so carried forward, a quarterly credit statement shall be forwarded to the concerned dealer and the claims reconciled accordingly.