With a particular focus on the many kinds of transactions that are either covered or excluded under the Electronic Credit Reversal and Reclaimed Statement, this article seeks to offer a thorough examination of the transactions that are reported under this statement.
1. Overview:-
Transactions that show up in GSTR-2B but are not recorded in the books of accounts are intended to be reported on the Electronic Credit Reversal and Reclaimed Statement. These transactions are listed in GSTR-3B Tables 4A(5) and 4B(2).
2. Transaction Type:-
This statement will not be used to report every transaction. The kinds of transactions that will not be covered are listed below:
a) Reverse Charge Mechanism (RCM) Transactions: This statement does not include RCM transactions. Only forward charge invoices pertaining to the acquisition of goods or services are included in this statement.
b) Blocked credit: Transactions involving credit that has been blocked are also not included. These invoices are not included in this statement since the input tax credit (ITC) on them is not eligible and cannot be claimed.
c) Import of Services: Transactions involving the import of services are subject to RCM. Consequently, this statement does not apply to these transactions.
d) Import of goods: This statement likewise excludes the import of products, same like it does the import of services.
e) Place of Supply (POS) Regulations: This statement excludes transactions that result in ineligible ITC and are subject to the Place of Supply regulations.
3. Transactions that Qualify for Reporting: This statement will only include invoices for which the ITC is applicable. Purchases that qualify for ITC under the GST regulations are the main emphasis.
4. Books with invoices but not in GSTR-2B: Table 4B(2) of the statement will not include invoices that are recorded in the books of accounts but do not appear in GSTR-2B. This guarantees that only invoices backed by GSTR-2B data are accurately reported.
5. Table 4D(1) Reporting:
- The ITC for invoices that were previously reflected in a previous month’s GSTR-2B will be displayed in both Table 4A(5) and Table 4D(1) if they are now included in the books of accounts.
- To guarantee that the numbers are consistent between periods, Table 4D(1) records any modifications to the ITC.
6. The Statement’s Presentation:
- The opening balance and the ITC amounts listed in Tables 4B(2) and 4D(1) will displayed on the Electronic Credit Reversal and Reclaimed Statement.
- Closing balance will be calculated as: Opening Balance + Amount shown in Table 4B(2) – Amount shown in Table 4D(1).
- It is crucial that the sum in Table 4D(1), not surpass the sum in Table 4B(2) including the opening balance. The amount in Table 4D(1) shouldn’t be greater than the figure in Table 4B(2) if no opening balance is provided.
7. Reporting Values That Are Negative: It is not possible to record negative numbers in Table 4B(2).
For example: Credit notes should technically be declared in Table 4B(2) if they appear in GSTR-2B but not in the books. However, they cannot be recorded here because negative values are prohibited.
- In these situations, the corresponding amount should be adjusted against the electronic credit ledger, and the adjustments should appear as a negative value in Table 4C. If there are insufficient funds in the ledger, the amount must be paid in cash.
8. Guidance: Avoid reporting credit notes in Table 4A(5) to prevent cash outflow in the event of insufficient credit balance.
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DISCLAIMER: The views expressed are strictly of the author. The contents of this article are solely for informational purpose. It does not constitute professional advice or recommendation. Author will not accepts any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon.
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