Govt. issued Instructions on Mandatory Furnishing of Correct and Proper Information of Ineligible/ Blocked ITC and Reversal in GSTR-3B

The Kerala GST department has issued a set of instructions regarding the Mandatory Furnishing of Correct and Proper Information of Ineligible/ Blocked ITC and Reversal in GSTR-3B.

The process of filing returns under the GST has been substantially changed over a period of time. One of the significant changes is the method for declaration of input tax credit (ITC) in the return in Form GSTR 3B. After the 43rd GST Council Meeting, the procedure for declaring the input tax credit in the return in Form GSTR 3B has been amended, and the same was notified in the notification referred 1st above. The GST Policy Wing of the Central Board of Indirect Taxes and Customs (CBIC) had already issued a clarification in the matter, vide the circular referred to above.

The input tax credit on the inward taxable supplies of goods or services or both to a registered person is not eligible under certain circumstances provided under Section 17(1), 17(2), 17(4) and 17(5) of the Central GST and Kerala State GST Act, 2017 read with Rules 38, 42 and 43 of the Central GST and Kerala GST Rules, 2017 (refer to the Central GST Act and Kerala State GST Act, 2017 for detailed provisions).

After the recent amendments, Table 4(A) of FORM GSTR 3B pertaining to the particulars of the input tax credit available get auto populated from the auto drafted input tax credit statement in FORM GSTR 2B. The utilization of input tax credit towards output tax dues in Table 6 of FORM GSTR 3B also get auto populated from the available balance in the electronic credit ledger and also from the Table 4(C) – “Net ITC available” of the FORM GSTR 3B of the respective tax period.

Instances have been noticed where the taxpayers are deducting the amount of ineligible input tax credit directly by editing the total amount of input tax credit auto populated in Table 4(A) of FORM GSTR 3B. This will result in incorrect settlement of funds to the State. Also, in some cases the taxpayers are not declaring the “ineligible” input tax credits, under Table 4(B) of FORM GSTR 3B resulting in wrong utilization of ineligible credit. Such taxpayer shall be liable to reverse/pay such input tax credit along with interest @ 18% per annum from the date of utilization till the date of reversal/repayment and shall also be penalized.

Accordingly, in order to ensure uniformity in return filing the Commissioner of State Tax, in exercise of the powers conferred by section 168 of the Kerala State Goods and Services Tax Act, 2017 hereby clarifies the issues detailed hereunder:

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