GSTN introduces Electronic Credit Reversal and Reclaimed Statement

The Goods and Services Tax Network (GSTN) has introduced the Electronic Credit Reversal and Reclaimed Statement with effect to the Notification No. 14/2022 – Central Tax dated 05th July, 2022 (read with circular 170/02/2022-GST, Dated 6th July,2022).

To help taxpayers submit accurate information about ITCs claimed, reversed, reclaimed, and ineligible ITCs, the government has announced amendments to Table 4 of Form GSTR-3B. Notification No. 14/2022-Central Tax, dated July 5, 2022, to be read in conjunction with Circular 170/02/2022-GST, dated July 6, 2022. As a result, subject to satisfying the applicable requirements, the reclaimable ITC that was previously reversed in Table 4(B)2 may be claimed in Table 4(A)5. It is also necessary to clearly disclose this reclaimed ITC in Table 4D(1) in addition to Table 4(A)5.

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 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.

This statement shall facilitate that while re-claiming ITC in GSTR-3B, the amount aligns appropriately with the corresponding reversed ITC. This aims to improve the overall consistency and correctness of ITC reversal and re-claims related transactions. For Monthly taxpayers, the specified return period pertains to 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 are being provided a facility to report their cumulative ITC reversal (ITC that has been reversed earlier and has not yet been reclaimed) as opening balance for “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

1. Taxpayers having monthly filing frequency are required to report their opening balance considering the ITC reversal done till the return period of July 2023.
2. 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.
3. The taxpayers have the opportunity to declare their opening balance for ITC reversal Until 30 th November 2023.
4. 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.
5. 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 provision for taxpayers to report their accumulated ITC reversal balance, the portal will subsequently maintain a record of reversal and re-claimed amounts on a return period basis in statement. Hence, a validation mechanism is incorporated into the GSTR-3B form.

If a taxpayer attempts to reclaim more ITC in Table 4D(1) than the available ITC reversal balance in the statement and ITC reversals made in the current return period in Table 4B(2), this validation will result in a warning message.

The taxpayers would still have the option to file even though this warning notice would help with proper reporting. The taxpayers may report any pending reversed ITC as the ITC reversal opening balance, but they are urged not to recover ITC in excess of the “Electronic Credit Reversal and Re-claimed Statement” closing amount.

The warning message will start to show for monthly taxpayers commencing with the GSTR-3B filing for the August 2023 return period. Similar to this, for quarterly taxpayers, this warning notice would begin with the July–September 2023 filing season.

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