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Nov’2022 GSTR 3B Return Advisory: Notices From State Governments And Way Forward

Many taxpayers are receiving notices from SGST Departments in their residential States regarding adjustments to be made before filing the GSTR 3B Return for November 2022 before 20th November 2022. In this Advisory we Analyse the issues and way forward in the matter.


Subject: Mandatory furnishing of correct and proper information of ineligible Input Tax Credit and reversal thereof in Form GSTR-3B 

Dear Taxpayer
(Name of Taxpayer)

That CBIC circular no. 170/02/2022-GST has highlighted incorrect reporting of ineligible Input Tax Credit by Taxpayers. In this context, this office has identified that there is large portion of unclaimed IGST ITC of your firm. This has led to loss of revenue for Govt. of Punjab. 

In this respect you are hereby advised that entire ITC available be first claimed in Table 4A of GSTR3B, then all form of ineligible ITC be reversed in Table 4B of GSTR3b. Even the ITC ineligible under Section 17(5) be also reversed in Table 4B for proper calculation of net ITC. 

It is further advised that ITC pertaining to financial year 2021-22 can be claimed till filing of GSTR3B of November-2022. For this purpose, you are advised to firstly claim entire ineligible ITC of FY 21-22 in Table 4A of GSTR3b of Oct-22 and then reverse the entire ineligible ITC in Table 4B. As the details of ineligible ITC are being provided in Table 4B, no further details are required to be provided in Table 4D. Kindly ensure compliance 



As per Circular 170/02/2022, Implemented from August 2022, the GSTR 3B Filing process has gone through a complete overhaul. Now the entire ITC reflecting in the GSTR 2B of a taxpayer (corresponding to GSTR1 filed by its suppliers) has to be accounted for in Table 4A of GSTR 3B when filed by the taxpayer. Thereafter incase any of this ITC is ineligible then the taxpayer has to reverse it in Table 4B.

For Example say incase a taxpayer in Haryana takes a mediclaim policy for which ITC is ineligible, it has to first  avail the ITC in Table 4A and then show it as a reversal in Table 4B.

This is required because the revenue would be flowing to the “state of Haryana” to the extent of the ITC shown as reversal  of Table 4B of GSTR 3B of the taxpayer. Incase the entire ITC is not recognized at all, then this revenue would be distributed among the states in the Ratio of their collections. Hence the bigger states like Maharashtra would gain and smaller ones would loose out due to lower ratio of collections vis-a-vis the bigger states.

We know that the GSTR 3B to be filed by 20th November, is the last return wherein the ITC missed out for FY 21-22 can be taken. Through these notices the State SGST  Departments are asking taxpayers to do an entire recalculation of ITC for FY 21-22 – claim and then reverse the ineligible ITC for FY 21-22 in the GSTR 3B filed in Nov’22. This would ensure that the taxpayer’s state would not loose out on revenue.

Now since the process is codified by Circular 170/02/2022, incase of non-compliance the taxpayers may be levied with a general penalty if Rs.20,000 or more per return. Hence at least those taxpayers who have received such notices should be careful to complete this exercise before filing GSTR3B in Nov’22.

Author Bio

Mr. Vivek Jalan is a Fellow Member of the Institute Of Chartered Accountants of India (ICAI) ; a qualified LL.M (Constitutional Law) and LL.B. He is the Chairman of The Core Group on Indirect Taxes of The CII- Economic Affairs and Taxation Committee (ER); He is the Chairman of The Fiscal Affairs Com View Full Profile

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April 2024