GST Update: Kerala GST Dept issues SOP for Monitoring Ineligible IGST ITC Reversal by Taxpayers in GSTR-3B

The Goods and Services Tax (GST) department of Kerala has issued a Standard Operating Procedure for Monitoring Ineligible Integrated Goods and Services Tax (IGST) Input Tax Credit (ITC) Reversal by Taxpayers in return Form GSTR-3B.

Form GSTR-3B is a simplified summary return and the purpose of the return is for taxpayers to declare their summary GST liabilities for a particular tax period and discharge these liabilities. A normal taxpayer is required to file Form GSTR-3B returns for every tax period.

The SOP includes the statutory provisions and also explains the scenarios with examples which would be easy to understand.

The purpose of this Standard Operating Procedure is to ensure the proper and timely reversal of the IGST credit which is actually ineligible for the taxpayer and thereby ensuring fifty per cent IGST credit settled against state share on a monthly basis rather than yearly ad-hoc settlement.

The Instructions for mandatory furnishing of correct and proper information of ineligible/blocked Input Tax Credit and reversal thereof in return in Form GSTR-3B has already issued vide Trade Circular No.1/2022 dated 21.11.2022. 

Regarding the reversal monitoring process mentioned in the SOP has to ensure inflow of IGST Credit eligible to the State, the disclosure of correct figures in GSTR 3B by the taxpayers shall be ensured through the following steps:

1. Selection of cases for verification
2. Proper Officer for verification and follow up
3. Verification schedule
4. Verification Process
5. Further Action

In pursuant to verification and monitoring, a verification register shall be maintained by the proper officer in respect of the GSTINs allotted for verification. The progress of verification of the cases by the proper officer shall be monitored by the jurisdictional District Joint Commissioners of Taxpayer Service.

Further, a Verification Progress Report, shall be prepared by the proper officer at the end of every month and submitted to the District Joint Commissioner and District Joint Commissioners in turn shall furnish a consolidated verification report to the Commissionerate.

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