Reporting of Eligible ITC, Ineligible ITC & ITC reversal in GSTR-3B

Summary: The process of reporting Input Tax Credit (ITC) in GSTR-3B requires distinguishing between eligible, ineligible ITC, and reversals across various categories. For imports, ITC on goods appears in GSTR-2B and must be reported in Table 4A(1) for eligibility or Table 4B(1) for ineligibility. Import of services, not reflected in GSTR-2B, follows a similar table allocation in 4A(2) and 4B(1). Reverse Charge Mechanism (RCM) transactions, whether goods or services, depend on supplier registration status and are reported in Table 4A(3) or 4B(1). ITC from ISD is auto-populated in Table 4D(2) post-GSTR-6 filing, distinguishing eligible (4A(4)) from ineligible credits (4D(2)). Forward charge transactions are recorded in Table 4A(5) or 4B(1), while ITC reversals due to rules like 37, 38, 42, and 43 are categorized as temporary or permanent. Blocked credits under Section 17(5) and lapses due to Place of Supply (POS) rules are reported in Table 4B(1) or 4D(2). Additionally, invoices not recorded in books or credits re-claimed after compliance adjustments should be accurately reflected in relevant tables. Compliance with Section 16(4) mandates ITC availing within the specified timeline, either by November 30 of the next financial year or before filing GSTR-9. The final credited ITC in the electronic ledger equals the net difference of reported figures in Table 4A and 4B. Adhering to the outlined processes ensures accurate ITC compliance in GSTR-3B filing. For further assistance, consult a tax professional.

1. Import of goods: 

• • ITC related to the import of goods is reflected in GSTR-2B.
  • This may include both eligible or ineligible ITC.

a. Eligible ITC: It will be reported in Table-4A(1) & it will also be credited to the electronic credit ledger. 

b. Ineligible ITC: Ineligible ITC related to the import of goods should be reported only in Table-4A(1) & 4B(1) and it will not be credited to the electronic credit ledger.

c. Invoice: The ITC pertaining to this document should be reported in Table-4A(1). 

d. Debit note: The ITC pertaining to this document should be reported in Table-4A(1).

e. Credit note: The ITC pertaining to this document should be reported in Table-4A(1) instead of Table-4B(2).

2. Import of services: 

• • ITC related to the import of services is not reflected in GSTR-2B.
  • This may include both eligible or ineligible ITC.

a. Eligible ITC: It will be reported in Table-4A(2) & it will also be credited to the electronic credit ledger. 

b. Ineligible ITC: Ineligible ITC related to the import of services should be reported only in Table-4A(2) & 4B(1) and it will not be credited to the electronic credit ledger.

c. Invoice: The ITC pertaining to this document should be reported in Table-4A(2). 

d. Debit note: The ITC pertaining to this document should be reported in Table-4A(2).

e. Credit note: The ITC pertaining to this document should be reported in Table-4A(2) instead of Table-4B(2). 

3. RCM transactions other than Import of services: 

• • ITC related to the goods or services liable to reverse charge will be reflected in GSTR-2b if the supplier is registered.
  • ITC related to the goods or services liable to reverse charge will not be reflected in GSTR-2b if the supplier is un-registered.
  • This may include both eligible or ineligible ITC.

a. Eligible ITC: It will be reported in Table-4A(3) & it will also be credited to the electronic credit ledger. 

b. Ineligible ITC: Ineligible ITC should be reported only in Table-4A(3) & 4B(1) and it will not be credited to the electronic credit ledger.

Example: RCM is applicable on cab services but ITC is ineligible.

c. Invoice: The ITC pertaining to this document should be reported in Table-4A(3). 

e. Debit note: The ITC pertaining to this document should be reported in Table-4A(3).

e. Credit note: The ITC pertaining to this document should be reported in Table-4A(3) instead of Table-4B(2). 

4. ISD transactions:

• • ITC related to the ISD is reflected in GSTR-2B after the filing of GSTR-6.

• • This may include both eligible or ineligible ITC.

a. Eligible ITC: It will be reported in Table-4A(4) & it will also be credited to the electronic credit ledger. 

b. Ineligible ITC: It will be reported in Table-4D(2) & it will not be credited to the electronic credit ledger. Ineligible ITC related to the ISD should be reported only in Table-4D(2), instead of Table-4A(4) & 4B(1). 

It will be auto populated in the relevant table i.e 4D(2) from GSTR-2B.

c. Invoice: The ITC pertaining to this document should be reported in Table-4A(4). 

d. Debit note: An ISD cannot issue a debit note.

e. Credit note: The ITC pertaining to this document should be reported in Table-4A(4) instead of Table-4B(2).

5. Forward charge transactions: 

• • ITC related to these transactions is reflected in GSTR-2B.
  • This may include both eligible or ineligible ITC.

a. Eligible ITC: It will be reported in Table-4A(5) & it will also be credited to the electronic credit ledger. 

b. Ineligible ITC: Ineligible ITC should be reported only in Table-4A(5) & 4B(1) and it will not be credited to the electronic credit ledger.

c. Invoice: The ITC pertaining to this document should be reported in Table-4A(5). 

d. Debit note: The ITC pertaining to this document should be reported in Table-4A(5).

e. Credit note: The ITC pertaining to this document should be reported in Table-4A(5) instead of Table-4B(2). 

6. POS Rules:

Any invoice with ineligible ITC due to Place of supply rules, falling under any of the above mentioned categories, should only be reported in Table-4D(2), instead of Table-4A & 4B.

7. Rule-37:

a. ITC reversed due to the non-payment of consideration to the supplier within 180 days from the date of invoice will be shown in Table-4B(2).

b. This rule does not applies on Import of goods, Import of services, ISD & RCM transactions, blocked credit transactions, POS transactions.

c. It is a temporary reversal of ITC.

d. After payment, it will be displayed in Table-4A(5) & 4D(1).

e. The time limit for claiming the ITC will not apply when re-availing ITC.

8. Rule-38:

a. ITC reversed under this rule by NBFC and others will be shown in Table-4B(1).

b. It is permanent reversal of ITC.

c. This rule is optional for NBFC & financial institutions.

9. Rule-42:

a. ITC reversed of input and input services if registered person engaged in taxable as well as exempt supplies will be report in Table-4B(1).

b. It is permanent reversal of ITC.

c. This rule is mandatory if registered person engaged in taxable as well as exempt supplies.

10. Rule-43:

1. ITC reversed of capital goods if registered person engaged in taxable as well as exempt supplies will be report in Table-4B(1).
2. It is permanent reversal of ITC.
3. This rule is mandatory if registered person engaged in taxable as well as exempt supplies.

11. Sec 17(5):

1. Blocked credit related to goods purchased for gifts, personal use, or goods destroyed, stolen or expired as well as goods or services for which ITC is blocked should be reported in Table-4B(1).
2. It is permanent reversal of ITC.
3. Separate reporting is mandatory of blocked ITC. It can-not be adjusted by netting off in Table-4A.

12. Invoices not received:

1. Invoice reflecting in 2B but not recorded in books will be shown in Table-4A & 4B(2).
2. It is a temporary reversal of ITC.
3. After the invoice is recorded in the books, it will be reflected in Table-4A and 4D(1).

13. Table-4C:-

Net ITC will be credited to electronic credit ledger which is the difference between Table-4A & Table-4B.

14. Sec 16(4):

If the time limit for availing ITC has expired, it should be reported only in the Table-4D(2) instead of Table-4A & 4B.

Time limit for ITC is earlier of both:

30^th November of next financial year

Or

Date of filing of GSTR-9.

15. Reclaim of ITC:

Any invoice that was reflected in 2B but not recorded in the books should be reported in Table-4A & 4B(2). Once the invoice is booked, it will be reflected in Table 4A and Table 4D(1).

Note:

• Credit note should be report in Table-4A instead of 4B.
• ITC lapsed should be report in Table-4D(2) instead of 4A & 4B.
• Ineligible ITC due to POS rules should be report in Table-4D(2) instead of 4A & 4B.

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Disclaimer: The views & opinions expressed in this article are solely those of the author. The contents of this article are solely for informational purpose. It does not constitute professional advice or recommendation. Readers should consult with a qualified professional or tax advisor before making any decisions based on the content of this article. 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.