Due Date Extended for reporting of opening Balance in Electronic Credit Reversal and Reclaimed statement

Brief :- In July 2022, the government made certain changes to the format of the GSTR-3B return, notably changing the procedure for reporting data in Table 3 and Table 4 of the form. The modifications were initially notified in July through Notification No. 14/2022-Central Tax. Subsequently, in September, the GSTN unveiled the template for data reporting in Table 4 of the GSTR-3B.

The new format of Table 4 of the GSTR-3B has now been updated to include a more detailed split of input tax credit (ITC) that is eligible and ineligible, restricted, reversed and reclaimed, along with other similar ITC information.

The aforementioned statement pertains to the notified amendments introduced in the GSTR 3B returns, aimed at facilitating taxpayers in accurately reporting information concerning Input Tax Credit (ITC) availed, ITC reversal, ITC re-claimed, and ineligible ITC. These adjustments became effective from August 2022 and were applicable to GSTR-3B returns thereafter.

In new Format of GSTR-3B, the total ITC figure gets auto-populated in Table 4(A) from the GSTR-2B statement (except for unavailable ITC due to the period of limitation or place of supply rules). Taxpayers are required to meticulously categorize their Input Tax Credit (ITC) into eligible and ineligible components for precise GSTR-3B reporting. This process permits the deduction of ineligible ITC from the automatically populated total ITC figure.

The next part is bifurcating ineligible ITC into temporary and permanent reversals. Temporary reversals refer to ITC that can be reclaimed at a later date.

In Table 4(B) of the GSTR-3B form, there are again two parts – 4(B)(1) and 4(B)(2). Taxpayers will now need to report all non-reclaimable reversals of input tax credit in Table 4(B)(1). This includes reversals as per-

  • Rule 38 of the CGST Rules, i.e. ITC restrictions applicable to a banking company
  • Rule 42 and 43 of the CGST Rules– explained above
  • Section 17(5) of the CGST Act– explained above

Note here that the new additions to this section for reporting are Rule 38 and Section 17(5).

Coming to Table 4(B)(2), taxpayers need to report all reclaimable reversals here, such as ITC restricted as per-

  • Rule 37of the CGST Rules – Non-payment of the sale consideration within 180 days
  • Section 16(2)(b) of the CGST Act – Where the goods/services have not been received yet
  • Section 16(2)(c) of the CGST Act– Where the suppliers have not paid their GST dues
  • Auto-populated credit notes

In this section, taxpayers can also report ITC availed in Table 4(A) in any previous tax period due to an inadvertent error. The net ITC will be displayed in Table 4(C), based on the formula 4(A) – 4(B) = 4(C).

Any ITC previously reversed under Table 4(B)(2) can be reclaimed in Table 4(A)(5) in the GSTR-3B return of the appropriate tax period. The break-up of such reclaimed ITC is shown in Table 4(D)(1) of the same return.

Finally, coming to Table 4(D), there are two sections – 4(D)(1) and 4(D)(2). Taxpayers need to use 4(D)(2) to report ITC, which is not available by law.

For instance, ITC restricted by Section 16(4) for being reported by the supplier after 30th November of the following financial year or after the filing of the annual GST return, whichever is earlier. Another instance is where ITC is restricted due to the place of supply (POS) rules. For example, CGST/SGST on hotel rooms in another state.

As per the mentioned notification the reclaimable ITC earlier reversed in Table4(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)

What has to be reported in Electronic Credit and Re-claimed Statement?

The Cumulative ITC Reversed not reclaimed till now in any GSTR 3B returns has to be mentioned as Opening Balance for “Electronic Credit Reversal and Re-claimed Statement” under the respective Tax headings.

The Taxpayers are only permitted to manually enter the opening balance of ITC Reversal pending to be yet reclaimed Proper working must be maintained for the amount reported as opening balance.

For Monthly taxpayers, pertains to opening balance of August 2023 is required to entered in Such ledger on GST Portal.

For Quarterly Taxpayers the specified return period corresponds to Q2 of the financial year 2023-24, encompassing the months of July-September 2023 is required to entered in Such ledger on GST Portal.

Once opening cumulative ITC Reversal balance pending for reclaiming is reported then the amounts mentioned in Table 4B (2) and Table 4D (1) will be auto populated in the Electronic Credit and Re-claimed Statement and closing balance shall be automatically calculated based on Data entered in Table 4B(2) and Table 4D(1) of GSTR-3B from Aug 2022 and onward periods.

In short, Table 4A(5)- Table 4D(1) matched with data auto populated in Table 4A(5) of GSTR-2B (Net of Credit Notes and other Amendments).

Due date for reporting Opening Balance under Electronic Credit and Re-claimed Statement: –

31ST January 2024 is the last date for reporting the opening balance under Electronic Credit and Re-claimed Statement (Earlier It was 30th November 2023).

If any mistakes or inaccuracies occur while reporting the opening Cumulative ITC Reversal balance then opportunity of amendment shall be provided upto maximum of 3 times.

The last date to amend the opening balance entered in Electronic Credit and Re-claimed Statement is 29th February 2023. (Earlier It was 31st December 2023).

Purpose :-

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. 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). This warning message would facilitate accurate reporting but the taxpayers will still have the option to proceed with filing. 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.

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Complied by:  VIJAY SAH, FCA, B.COM(H)

Disclaimer: This material and the information contained is intended to provide general information on a particular subject or subjects and in not an exhaustive treatment of such subject(s). The information is not intended to be relied upon as the sole basis for any decision which may affect you or your business. Before making any decision or taking any action that might affect your business, you should consult with our team.

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