GSTN Advisory: Take Action on Reclaimed ITC Reversals Before November 30, 2023

The GST landscape saw crucial updates in July 2022, impacting the reporting of Input Tax Credit (ITC) in GSTR 3B. Notably, changes in ITC availment, reversal, and reclamation were introduced.

Notification No. 14/2022 dated 5-July-2022 & Circular 170/02/2022 dated 6- July-2022 States that 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).

31-August-2023

New feature has been introduced in GST portal, it is called Electronic Credit and Re-claimed Statement

Objectives of ECRRS :

  • Tracks the 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.
  • The amounts aligns appropriately with the corresponding reversed ITC.
  • Facilitates correct and accurate reporting of ITC reversal and reclaim thereof
  • Improves the overall consistency and correctness of ITC reversal and re-claims related transactions.
  • The GST portal maintains a record of reversal and re-claimed amounts on a return period basis in statement and works like a validation mechanism in GSTR-3B.
  • It 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.

Applicable Effective From:

Taxpayer Type Return Period Months Included
Monthly Taxpayers Aug-23 Aug-23
Quarterly Taxpayers Q2 of Financial Year 2023-24 July 2023, August 2023, September 2023

Obligation to Report Cumulative Opening Balances

Report cumulative ITC that has been reversed earlier and has not yet been reclaimed as of specified date as opening balance in ECRRS.

Cut off timelines:

Opening Balances Reporting Cut off Return Period
Monthly Taxpayers Up to July 2023 return period
Quarterly Taxpayers Up to Q1 of FY 2023-24 (April-June 2023 return period)

Monthly Taxpayers are required to report their opening balance considering the ITC reversal done till the return period of July 2023.

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.

Last Date for Reporting : 30-November-2023. ( No fresh reporting after this date)

Last Date for Amendments: 31-December-2023. (Only 3 times)

Reconciliations: GSTR 3B vs GSTR 2B vs Books

  • List out the ITC Reversals reported in GSTR 3B as of specified return period.
  • Identify the reclaimable ITC as of 01-August-2023.
  • Reconcile with GSTR 2B and books.
  • Make sure reclaimable ITC is eligible to claim as on reporting date.

Navigation path at GST portal to report ITC reversal balance:

  • Dashboard >> Services >>Ledger >>Electronic Credit Reversal and Re-claimed Statement.

Conclusion: In conclusion, businesses operating under the GST regime need to be well-versed with the changes brought about by the ECRRS feature. It offers a streamlined approach to track ITC reversals and re-claims, significantly enhancing the accuracy of reporting. Adherence to the reporting obligations and deadlines outlined in the GSTN advisory is imperative to avoid discrepancies and maintain compliance. The window for taking necessary actions, such as reporting and amendments, is limited, making timely compliance crucial.

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