The Goods and Services Tax Network (GSTN) has ushered in a new era of taxation in India, bringing efficiency and transparency to the country’s tax system. One of the pivotal components of GSTN is the electronic credit reversal and re-claimed statement, in order to facilitate the taxpayers in correct and accurate reporting of ITC reversal and reclaim thereof and to avoid clerical mistakes, a new ledger namely Electronic Credit and Re-claimed Statement is being introduced on the GST portal. which will play a significant role in simplifying tax compliance for businesses.
In this article, we will delve into the concept of electronic credit reversal and re-claimed statements, understanding their importance, and how they contribute to a seamless GST regime.
Before go forward, we need to understand the procedure for filling Table-4 of GSTR-3B which is corrected by Notification No. 14/2022 – Central Tax dated 05th July, 2022 (read with circular 170/02/2022-GST, Dated 6th July,2022)
Procedure for Filling Table-4 of GSTR-3B
Let’s understand the procedure to fill details in Table-4 of GSTR-3B
| Table: 4 Eligible ITC | ||||
| Details | Integrated Tax | Central Tax | State/ UT Tax | Cess |
| 1 | 2 | 3 | 4 | 5 |
| (A) ITC Available (whether in full or part) | ||||
| (1) Import of goods | ||||
| Import of services | ||||
| (3) Inward supplies liable to reverse charge (other than 1 & 2 above) | 1000 | 100 | 100 | |
| (4) Inward supplies from ISD | ||||
| (5) All other ITC | 909000 | 57900 | 57900 | |
| (B) ITC Reversed | ||||
| (1) As per rules 38,42 & 43 of CGST Rules and section17(5) | 10000 | 1000 | 1000 | |
| (2) Others | 50000 | 5000 | 5000 | |
| (C) Net ITC Available (A) – (B) | 850000 | 52000 | 52000 | |
| (D) Ineligible ITC | ||||
| (1) ITC reclaimed which was reversed under Table 4(B)(2) in earlier tax period | 0 | 0 | 0 | |
| (2) Ineligible ITC under section 16(4) & ITC restricted due to POS rules | 0 | 0 | 0 | |
From the format of Table 4, following is noteworthy:
i. Eligible ITC auto populated from GSTR-2B (Section-16(2) aa and read with Rule-36(4)). GSTR-2B provides eligible and ineligible Input Tax Credit (ITC) for each month, similar to GSTR-2A but remains constant or unchanged for a period. GSTR 2B is value reported by the supplier in his GSTR-1 under section-37 which is autogenerated in form GSTR-2B of the Recipients.
ii. All non-reclaimable reversal of ITC needs to be reported in table 4(B)(1)
iii. All reclaimable ITC reversals may be reported in table 4(B)(2). It should be noted that ITC reversed under 4(B)(2) can be reclaimed in table 4(A)(5) at appropriate time and the break-up detail of such reclaimed ITC should be provided in 4(D)(1) in the same return.
iv. The ITC not-available mentioned in GSTR-2B of the taxpayer has to be reported in 4(D)(2) of table 4.
v. Any ITC availed inadvertently in Table 4(A) in previous tax periods due to clerical mistakes or some other inadvertent mistake maybe reversed in Table 4(B)2.
Eligible ITC (not available in GSTR-2B but reclaimed earlier reversal)
| Details | Integrated Tax | Central Tax | State/ UT Tax | Cess |
| 1 | 2 | 3 | 4 | 5 |
| (A) ITC Available (whether in full or part) | ||||
| (1) Import of goods | ||||
| Import of services | ||||
| (3) Inward supplies liable to reverse charge
(other than 1 & 2 above) |
0 | 0 | 0 | |
| (4) Inward supplies from ISD | ||||
| (5) All other ITC | 50000 | 5000 | 5000 | |
| (B) ITC Reversed | ||||
| (1) As per rules 38,42 & 43 of CGST Rules and section17(5) | 0 | 0 | 0 | |
| (2) Others | 0 | 0 | 0 | |
| (C) Net ITC Available (A) – (B) | 50000 | 5000 | 5000 | |
| (D) Ineligible ITC | ||||
| (1) ITC reclaimed which was reversed under Table 4(B)(2) in earlier tax period | 50000 | 5000 | 5000 | |
| (2) Ineligible ITC under section 16(4) & ITC restricted due to POS rules | 0 | 0 | 0 | |
Table-4B (1)- Permanent nature reversal of ITC that cannot be reclaim.
Table-4B (1)- Temporary nature reversal of ITC that may reclaim in future GSTR-3B.
Accordingly, the reclaimable ITC earlier reversed in Table-4(B)2 may be subsequently claimed in Table 4(A)5 on fulfilment of necessary conditions. Such reclaimed ITC in Table 4(A)5 also needs to be explicitly reported in Table 4D(1) of GSTR-3B.
Importance of the New Ledger in GSTN:
1. In order to facilitate the taxpayers in correct and accurate reporting of ITC reversal and reclaim thereof and to avoid clerical mistakes, a new ledger namely “Electronic Credit and Re-claimed Statement” is being introduced on the GST portal. This statement will help the taxpayers in tracking of their ITC that has been reversed in Table 4B(2) and thereafter re-claimed in Table 4D(1) and 4A(5) for each return period, starting from August return period.
2. This statement shall facilitate that while re-claiming ITC in GSTR-3B, the amount aligns appropriately with the corresponding reversed ITC. This aims to improve the overall consistency and correctness of ITC reversal and re-claims related transactions.
3. Taxpayers are being provided a facility to report their cumulative ITC reversal (ITC that has been reversed earlier and has not yet been reclaimed) as opening balance for “Electronic Credit Reversal and Re-claimed Statement”, if any. The navigation to report ITC reversal balance:
Login >> Report ITC Reversal Opening Balance.
or
Services >> Ledger >> Electronic Credit Reversal and Re-claimed Statement >> Report ITC Reversal Opening Balance
4. Taxpayers having monthly filing frequency are required to report their opening balance considering the ITC reversal done till the return period of July 2023.
5. Quarterly taxpayers shall report their opening balance up to Q1 of the financial year 2023-24, considering the ITC reversal made till the April-June 2023 return period.
6. The taxpayers have the opportunity to declare their opening balance for ITC reversal Until 30th November 2023.
7. The taxpayers shall also be provided 3 (three) amendment opportunities to correct their opening balance in case of any mistakes or inaccuracies in reporting.
8. This amendment facility shall be discontinued after 31st December 2023.
Benefit:
1. With the provision for taxpayers to report their accumulated ITC reversal balance, the portal will subsequently maintain a record of reversal and re-claimed amounts on a return period basis in statement. Hence, a validation mechanism is incorporated into the GSTR-3B form.
2. This validation will trigger a warning message if a taxpayer attempts to re-claim excess ITC in table 4D (1) than the available ITC reversal balance in the statement along with ITC reversal made in current return period in Table 4B (2).
However, the taxpayers are advised not to reclaim ITC exceeding the closing balance of “Electronic Credit Reversal and Re-claimed Statement” and may report their pending reversed ITC, if any, as ITC reversal opening balance.
Conclusion- Electronic credit reversal and re-claimed statement on GSTN are essential components of the GST regime in India. They ensure that businesses claim only the ITC they are eligible for, thereby promoting tax compliance and transparency. Understanding and correctly utilizing these mechanisms is crucial for businesses to operate within the GST framework efficiently. Moreover, the GSTN’s online portal simplifies these processes, making them more accessible to taxpayers and tax authorities alike. As the GST system continues to evolve, electronic credit reversal and re-claimed statements will remain fundamental tools in ensuring a fair and effective tax ecosystem.
Advisory: Changes in Table 4 of GSTR 3B – Reporting of ITC availment, reversal & Ineligible ITC
Adv Rajbir Singh | IGTM Tax Advisory
Disclaimer: The information contained in this write up is to provide a general knowledge to the intended user. Hence, we recommend that professional advice is sought before taking any action on specific issues before entering into any investment or financial obligation based on this Content.
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