Introduction
Refund applications relating to unutilised Input Tax Credit (ITC) under GST have undergone a significant procedural change with the recent update in Annexure-B utility available on the GST portal. Taxpayers claiming refund of accumulated ITC are now required to furnish invoice-wise details in an expanded format through the updated offline utility and upload the same in JSON format.
The revised utility has introduced several additional reporting fields, validations and system checks which are resulting in practical filing difficulties for taxpayers, especially in cases involving ITC reversals, reclaimed credits, imports and reverse charge transactions.
This article discusses the major changes introduced in Annexure-B, important reporting requirements, common validation issues and practical difficulties currently faced while filing refund applications.
What is Annexure-B?
Annexure-B refers to the statement of invoices required to be submitted along with refund applications for refund of unutilised ITC.
The requirement originates from Circular No. 125/44/2019-GST dated 18.11.2019 issued by the CBIC for processing of refund applications under GST.
The statement primarily captures invoice-wise details of inward supplies on which ITC has been availed and which forms part of the refund claim.
Major Changes Introduced in Updated Annexure-B Utility
The GST portal has now updated the Annexure-B offline utility by introducing several additional reporting columns and validations.
The revised utility requires taxpayers to furnish more granular classification of inward supplies and ITC eligibility.
The major additional columns introduced are:
1. Type of Inward Supply
2. Type of Document
3. Port Code for Import of Goods
4. Whether ITC is Blocked under Section 17(5)
5. Amount of Ineligible ITC
6. GSTR-2B Period
The data is required to be uploaded through JSON generated from the offline utility.
Comparison with Earlier Annexure-B Format
Under the earlier format, taxpayers were mainly required to report invoice-wise details along with tax amounts. The updated utility has substantially increased data validation and reconciliation requirements.
The present utility now attempts to match the following simultaneously:
- GSTR-2B
- Table 4(A) of GSTR-3B
- ITC reversals under Table 4(B)
- Reclaimed ITC under Table 4(D)(1)
- Eligible ITC for refund
This has resulted in additional compliance and reconciliation effort.
Reporting Requirement for “Type of Inward Supply”
One of the major changes is mandatory classification of inward supplies.
Each category must be reported separately in Column No. 2 of the utility. If multiple categories are combined, validation errors may arise during JSON upload.
The categories presently available are:
1. Import of Goods
2. Import of Services
3. Import of Goods (Supplies from SEZ to DTA)
4. Import of Services (Supplies from SEZ to DTA)
5. Inward supplies from registered persons
6. Inward supplies liable to reverse charge – registered persons
7. Inward supplies liable to reverse charge – unregistered persons
8. Inward supplies from ISD
Proper classification is extremely important since the portal validations are linked with GSTR-2B reporting logic.
Reporting of Invoice Type
The revised utility also requires separate disclosure of document type in Column No. 3.
The following document types are required to be reported separately:
- Invoice / Bill of Entry
- Credit Note
- Debit Note
Incorrect classification may result in upload failure or mismatch during validation.
Important Format Requirements
Certain fields require strict format compliance.
Date Format
- Document Date (Column No. 7): DD-MM-YYYY
- GSTR-2B Period (Column No. 21): MM-YYYY
Incorrect date format results in validation failure during JSON generation or upload.
Matching of ITC with GSTR-3B
The ITC values appearing in Annexure-B are expected to reconcile with:
- Table 4(A) of GSTR-3B
- Reversal entries under Table 4(B)(1)
- Reversal entries under Table 4(B)(2)
The utility separately captures reversals and derives the net eligible ITC for refund.
Accordingly, the net ITC appearing after considering reversals becomes the eligible ITC for refund computation.
Issue of Temporary ITC Reversal and Subsequent Reclaim
A practical difficulty arises in cases where ITC is temporarily reversed under Table 4(B)(2) of GSTR-3B due to reasons such as:
- Invoice not available
- Expense not accounted in books
- Pending vendor compliance
- Temporary ineligibility
Subsequently, such ITC may be reclaimed in Table 4(D)(1) in later tax periods.
Due to this mechanism, the same invoice may appear multiple times in reconciliation statements across different months.
This creates duplication issues in Annexure-B utility.
Practically, it is advisable to maintain proper reconciliation working and explain the duplication before the refund sanctioning authority wherever required.
Treatment of Capital Goods in Annexure-B
Another major issue relates to reporting of capital goods.
ITC pertaining to capital goods is not eligible for refund under accumulated ITC refund provisions. However, the utility presently does not provide a specific reporting treatment for such transactions.
Practical issues arise due to the following:
If “Eligible ITC” is selected as “Yes”
The utility considers the amount as eligible refund ITC.
If “Blocked ITC under Section 17(5)” is selected as “Yes”
The utility treats the amount as blocked credit under Section 17(5).
However, capital goods credit is not necessarily blocked credit under Section 17(5). It is merely ineligible for refund under Rule 89 in many cases.
This creates practical reporting difficulty in the current utility structure.
Accordingly, capital goods invoices are preferably not included in Annexure-B refund workings.
Common Validation Errors in Offline Utility
Before generation of JSON file, the following validation issues are commonly faced:
1. Decimal Restriction
Values can contain maximum two decimal places.
2. Document Number Restriction
Document number field accepts maximum 16 characters including alphanumeric values and permitted special characters such as “/” and “-”.
3. Incorrect Date Format
Date format mismatch in Column 7 or Column 21 results in validation error.
4. Zero Values Not Allowed
In tax columns relating to:
- CGST
- SGST
- IGST
- Cess
blank values should be maintained where tax amount is not applicable.
Entering “0” may trigger validation error.
5. Eligible ITC Mismatch
The eligible ITC total should reconcile with Column No. 16.
6. Mandatory Port Code
Port code becomes mandatory in case of import of goods transactions.
Errors Observed After Uploading JSON on GST Portal
Even after successful JSON generation, additional portal-level validations are carried out after upload.
The following practical issues are commonly observed:
- Incorrect GSTR-2B period mapping
- Mismatch with GSTR-2B data
- Wrong HSN classification
- Selection of incorrect inward supply category
- Goods HSN reported as services or vice versa
- Incorrect ITC eligibility selection
In many situations, the JSON file gets uploaded successfully but line-level validation errors are still displayed.
Transactions Generally Not Appearing in GSTR-2B
Certain categories naturally do not appear in GSTR-2B and therefore portal validations may continue to show exceptions.
Examples include:
- Inward supplies from unregistered persons under RCM
- Import of Goods (IMPG)
- Import of Services
- Supplies through ECO where tax paid by ECO under RCM provisions
Although validation messages may appear, eligible ITC values are generally still considered in refund computation.
Proper reconciliation and explanatory workings should nevertheless be maintained.
Practical Approach Until Utility is Further Updated
The current utility still appears to be under evolving stage and certain structural issues continue to exist.
Till further system refinements are made by GSTN, taxpayers may practically adopt the following approach:
- Maintain detailed reconciliation between GSTR-2B, GSTR-3B and Annexure-B
- Remove duplicate invoices arising due to temporary reversals and reclaim entries
- Keep explanatory workings ready for departmental clarification
- Upload supporting PDF reconciliation wherever required
- Ensure classification consistency for inward supply type and HSN category
- Verify all date formats and mandatory fields before JSON generation
Conclusion
The revised Annexure-B utility marks a major shift towards invoice-level verification and system-based validation of refund claims under GST. While the objective appears to be improved reconciliation and verification, several practical challenges presently exist in the utility structure.
Issues relating to duplicate invoices, temporary reversals, treatment of capital goods, GSTR-2B mismatches and portal validations are resulting in additional compliance burden for taxpayers.
Until suitable clarifications or utility updates are introduced, careful reconciliation and proper documentation will play a critical role in successful processing of refund applications.
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Disclaimer: The issues and practical observations discussed above are based on experience during preparation and filing of refund applications using the updated Annexure-B utility. Taxpayers are advised to independently verify legal positions and procedural requirements based on facts of each case.
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