Reporting of ITC Related Claims In Revised Table 4 of Form GSTR-3B

Brief Note on The Reporting of The Input Tax Credit (ITC) Related Claims In The Revised Table 4 of The Form GSTR-3B

Background 

Vide Notification No. 14/2022-CT dt. 05.07.2022, the Government had inter alia made certain changes in the format of reporting in GSTR 3B. The key change relates to the manner of reporting the ITC-related claims in several fields in Table 4 of GSTR 3B. The said change has now been operationalized on the GSTN portal and hence shall become applicable for the GSTR 3B filings that are to be done for August 2022 and henceforth.

The principal change in the revised table 4 is to capture all the available ITC (including the ineligible ITC) and then bifurcate the same into eligible and ineligible ITC so that only the eligible ITC gets credited in the electronic credit ledger. Further, the reversal of ITC is also bifurcated into (a) permanent reversal and (b) temporary reversal that is subject to re-availment in future. Further, the re-availed ITC in a future tax period is also required to be disclosed separately.

The aforesaid change in the manner of reporting the ITC-related claims is to ensure correct accountal and accurate settlement of funds between the Central and State  Governments. By seeking the bifurcation of the gross ITC claim into eligible/ineligible and further seeking the bifurcation of reversal into permanent/temporary, the Government wants to understand the ineligible and permanently reversed ITC claims so that the said revenue can be used for the settlement of funds between the Central and State  Governments.

It must however be noted that one should not miss the forest for the trees. Hence one should ensure that the claim of the net eligible ITC reflected in Table 4(C) should be in accordance with the law irrespective of the approach undertaken to ensure compliance with the new requirement. 

The revised manner of reporting the ITC-related claims in Table 4 of GSTR 3B is as under: 

4. Eligible ITC
	IGST	CGST	SGST	Cess
(A) ITC Available (whether in full or part)
(1) Import of Goods	–			–
(2) Import of Services	–
(3) Inward supplies liable to reverse charge (other than 1 & 2 above)	–	–	–	–
(4) Inward supplies from ISD	–	–	–	–
(5) All other ITC	–	–	–	–
Gross ITC (1+2+3+4+5)	–	–	–	–
(B) ITC Reversed
(1) As per rules 38,42 and 43 of CGST Rules and sub-section (5) of section 17
(2) Others
(C) Net ITC Available (A) – (B)	–	–	–	–
(D) Other Details
(1) ITC reclaimed which was reversed under Table 4(B)(2) in earlier tax period
(2) Ineligible ITC under section16(4) and ITC restricted due to PoS provisions

Component-wise remarks in respect of the aforesaid revised table are as follows:

Table 4(A) ITC AVAILABLE (WHETHER IN FULL OR PART)

1. Import of goods: There is no change in the manner of the reporting. In this field, ITC is to be determined and reflected as per books of accounts. The prescribed document for the availment of the ITC shall be the Bill of Entry. It must be ensured that the goods have been received in the tax period in which the ITC is being claimed.

2. Import of services: There is no change in the manner of reporting. Eligible ITC of GST paid under RCM on import of services to be determined and reflected in this field.

3. Inward supplies liable to reverse charge (other than 1 & 2 above): There is no change in the manner of reporting. ITC is to be determined and reflected in this field as per the books of accounts. In the case of registered vendors (e.g. registered GTA, etc.) the claims of ITC shall be subject to the furnishing of the invoice details by the given registered vendors and reflection of the same in GSTR 2B of the given tax period.

4. Inward supplies from ISD: There is no change in the manner of reporting. This field shall include the gross claim of the ITC distributed by the ISD unit during the tax period. It shall include the ineligible ITC u/s 17(5) of the CGST Act, 2017 which would have been distributed by the ISD.

5. All other ITC: There is a significant change in the manner of reporting. Till now, taxpayers were declaring only the net eligible ITC in the said field. Now the taxpayers are expected to declare the gross domestic ITC including the ITC ineligible/restricted u/s 17(2)/(5) (i.e. related to exempt supplies or restricted ITC). It shall however exclude the ITC which is ineligible u/s 16(4) (on account of limitation) or where the place of supply is in another State as the said ineligible ITC is only required to be disclosed in paragraph no. 4(D)(2) of GSTR 3B.

The reporting of the eligible as well as ineligible/restricted ITC under this field shall be determined and reflected as per the books of accounts subject to the furnishing of the invoice details by the concerned vendors and reflection of the same in GSTR-2B either in the current tax period or earlier tax periods.

Further, this field shall also include the re-availment of the ITC which was reversed earlier. To determine the reportable ITC amount, kindly follow the below process:

Sr. No.	Particulars
1.	Eligible ITC as per books of the current tax period subject to the reflection of the same in GSTR-2B (either in the current tax period or earlier tax periods)
2.	Add: Eligible ITC reflected in the books in the earlier tax periods but was not availed in the said past tax periods (due to non-reflection in GSTR 2B) and is now eligible (owing to reflection in GSTR 2B) and hence availed in the current tax period
3.	Add: Ineligible ITC u/s. 17(5) of the CGST Act, 2017 as per books of the current tax period. The list of the restricted ITC u/s 17(5) is attached as EXHIBIT-A for reference.
4.	Add: Re-availment of ITC in the current tax period which was reversed earlier due to some reasons (like failure to pay the consideration within 180 days, wrongly reversed earlier, etc.)

 Table 4(B) ITC REVERSED 

(1) As per rules 38, 42, and 43 of CGST Rules and sub-section (5) of section 17:

In this field, the ineligible/restricted ITC as per rule 38 (restricted ITC for banking company or financial institution), rules 42 and 43 (restricted ITC on account of exempt supplies) and Sec. 17(5) (restricted ITC) to be determined and reflected. In nutshell, all permanent reversal of ITC is to be reflected here.

(2) Others: 

The ineligible or restricted ITC on the following grounds (illustrative) to be determined and reflected in this field:

– ITC reversal under Rule 37 (Failure to pay within 180 days)

– ITC reversal due to tax credit notes issued by the vendors

Table 4(C) NET ITC AVAILABLE (A) – (B)

In this field, the amount gets auto-calculated based on the amounts reported in Tables 4(A) and 4(B) above. This field represents the net eligible ITC which will get credited to the electronic credit ledger.

(D) OTHER DETAILS

(1) ITC reclaimed which was reversed under Table 4(B)(2) in earlier tax period

The amount of ITC which was reversed under table 4(B)(2) of the earlier tax period and is now reclaimed in the current tax period due to fulfilment of the necessary conditions to be determined and reflected in this field. It must be noted that this is merely for disclosure. The said re-availment shall also form part of table 4A(5).

(2) Ineligible ITC under section 16(4) and ITC restricted due to PoS provisions 

The amount of the ITC ineligible/restricted u/s 16(4) (due to limitation) or where the place of supply is in another State will have to be disclosed at 4(D)(2). It must be noted that this is merely for disclosure. Such ineligible ITC should also not be part of table 4A(5).

Exhibit A – Extract of the restricted ITC list u/s 17(5) of the CGST Act, 2017

(5)  Notwithstanding anything contained in sub-section (1) of section 16 and sub-section (1) of section 18, input tax credit shall not be available in respect of the following, namely :—

[(a) motor vehicles for transportation of persons having approved seating capacity of not more than thirteen persons (including the driver), except when they are used for making the following taxable supplies, namely :—

(A) further supply of such motor vehicles; or

(B) transportation of passengers; or

(C) imparting training on driving such motor vehicles;

(aa) vessels and aircraft except when they are used —

(i) for making the following taxable supplies, namely :—

(A) further supply of such vessels or aircraft; or

(B) transportation of passengers; or

(C) imparting training on navigating such vessels; or

(D) imparting training on flying such aircraft;

(ii) for transportation of goods;

(ab) services of general insurance, servicing, repair and maintenance in so far as they relate to motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa):

Provided that the input tax credit in respect of such services shall be available —

(i) where the motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa) are used for the purposes specified therein;

(ii) where received by a taxable person engaged —

(I) in the manufacture of such motor vehicles, vessels or aircraft; or

(II) in the supply of general insurance services in respect of such motor vehicles, vessels or aircraft insured by him;

(b) the following supply of goods or services or both —

(i) food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, leasing, renting or hiring of motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa) except when used for the purposes specified therein, life insurance and health insurance :

Provided that the input tax credit in respect of such goods or services or both shall be available where an inward supply of such goods or services or both is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as an element of a taxable composite or mixed supply;

(ii) membership of a club, health and fitness centre; and

(iii) travel benefits extended to employees on vacation such as leave or home travel concession :

Provided that the input tax credit in respect of such goods or services or both shall be available, where it is obligatory for an employer to provide the same to its employees under any law for the time being in force.]

(c) works contract services when supplied for construction of an immovable property (other than plant and machinery) except where it is an input service for further supply of works contract service;

(d) goods or services or both received by a taxable person for construction of an immovable property (other than plant or machinery) on his own account including when such goods or services or both are used in the course or furtherance of business.

Explanation. — For the purposes of clauses (c) and (d), the expression “construction” includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalisation, to the said immovable property;

(e) goods or services or both on which tax has been paid under section 10;

(f) goods or services or both received by a non-resident taxable person except on goods imported by him;

(g) goods or services or both used for personal consumption;

(h) goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples; and

(i) any tax paid in accordance with the provisions of sections 74, 129 and 130.

Explanation. — For the purposes of this Chapter and Chapter VI, the expression “plant and machinery” means apparatus, equipment, and machinery fixed to earth by foundation or structural support that are used for making outward supply of goods or services or both and includes such foundation and structural supports but excludes —

(i) land, building or any other civil structures;

(ii) telecommunication towers; and

(iii) pipelines laid outside the factory premises.