GSTN Advisory on introducing Electronic Credit Reversal and Re-claimed Statement

The Goods and Services Tax Network(GSTN) has issued Advisory on introducing Electronic Credit Reversal and Re-claimed Statement.

The Government has notified certain changes in Table 4 of Form GSTR-3B to enable taxpayers in reporting correct information regarding ITC availed, ITC reversal, ITC re-claimed and ineligible ITC vide Notification No. 14/2022 – Central Tax dated 05th July, 2022 (read with circular 170/02/2022-GST, Dated 6th July,2022).

Accordingly, the reclaimable ITC earlier reversed in Table 4(B)2 may be subsequently claimed in Table 4(A)5 on fulfilment of necessary conditions. Such reclaimed ITC in Table 4(A)5 also needs to be explicitly reported in Table 4D(1).

In order to facilitate the taxpayers in correct and accurate reporting of ITC reversal and reclaim thereof and to avoid clerical mistakes, a new ledger namely Electronic Credit and Re-claimed Statement is being introduced on the GST portal. This statement will help the taxpayers in tracking of their ITC that has been reversed in Table 4B(2) and thereafter re-claimed in Table 4D(1) and 4A(5) for each return period, starting from August return period.

The statement will ensure that when reclaiming ITC in GSTR-3B, the amount matches the equivalent reversed ITC. The goal of this is to enhance the general uniformity and validity of ITC reversal and re-claims transactions. The stipulated return period for monthly taxpayers is August 2023.

For those filing quarterly returns, the specified return period corresponds to Q2 of the financial year 2023-24, encompassing the months of July-September 2023.

Taxpayers will be able to disclose their cumulative ITC reversal (ITC that has been reversed before but has not yet been recovered) as the beginning balance for their “Electronic Credit Reversal and Re-claimed Statement,” if any.

The navigation to report ITC reversal balance:

Login >> Report ITC Reversal Opening Balance.

or

Services >> Ledger >> Electronic Credit Reversal and Re-claimed Statement >> Report ITC Reversal Opening Balance

a. Taxpayers having monthly filing frequency are required to report their opening balance considering the ITC reversal done till the return period of July 2023.

b. In contrast, quarterly taxpayers shall report their opening balance up to Q1 of the financial year 2023-24, considering the ITC reversal made till the April-June 2023 return period.

c. The taxpayers have the opportunity to declare their opening balance for ITC reversal Until 30th November 2023.

d. The taxpayers shall also be provided 3 (three) amendment opportunities to correct their opening balance in case of any mistakes or inaccuracies in reporting. Importantly, until 30th November 2023, both reporting and amendment facilities are accessible.

e. However, after 30th November till 31st December 2023, only amendments will be permitted and the option for fresh reporting will not be available. This amendment facility shall be discontinued after 31st December 2023.

With the option for taxpayers to disclose their accumulated ITC reversal balance, the site will keep a record of reversal and re-claimed amounts in the statement on a return period basis. As a result, the GSTR-3B form includes a validation mechanism. If a taxpayer attempts to re-claim more ITC in table 4D(1) than the available ITC reversal amount in the statement, combined with ITC reversal made in the current return period in Table 4B(2), this validation will generate a warning notice.

This warning notice would help proper reporting, but taxpayers would still have the choice to file. However, taxpayers are recommended not to recover ITC in excess of the closing amount of the “Electronic Credit Reversal and Re-claimed Statement” and may report any pending reversed ITC as ITC reversal opening balance.