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Uniform Reporting Practice Manual for Taxpayers for ITC to be availed or reversed in GSTR-3B.

Are you still reporting Net ITC claimed in GSTR-3B? You might get notice for mismatch with GSTR-2B?

Recently, CBIC issued a detailed circular on correct and uniform reporting of reversal of ITC as well as ineligible ITC.

It has been observed by GSTN that different practices were being followed to report ineligible ITC as well as various reversals of ITC in GSTR-3B. Therefore CBIC issued a detailed Circular mentioning the procedure to be followed by taxpayers.

  • Details of GSTR-2B are auto-populated in Table 4 of GSTR-3B which are editable in the hands of registered person.
  • However, various reversals of ITC on account of rule 42 and 43 of the CGST Rules or for any other reasons are required to be made by the registered person, on his own ascertainment, in Table 4(B) of GSTR-3B. 
  • It may be noted that the amount of Net ITC Available as per Table 4(C) of FORM GSTR-3B gets credited into the electronic credit ledger (ECL) of the registered person. Therefore, it is important that any reversal of ITC or any ITC which is ineligible under any provision of the CGST Act should not be part of Net ITC Available in Table 4(C) and accordingly, should not get credited into the ECL of the registered person.
  • It is pertinent to mention that the ineligible ITC, which was earlier not part of calculation of eligible/available ITC, is now part of calculation of eligible/available ITC in view of auto-population of Table 4(A) of GTSR-3B from GTSR-2B. Thereafter, the registered person is required to identify ineligible ITC as well as the reversal of ITC to arrive at the Net ITC available, which is to be credited to the ECL.

Below are the important points, which should be followed by all taxpayers for correct reporting in GSTR-3B:

1. Total ITC (eligible as well as ineligible) is being auto-populated from GSTR-2B to Table 4(A) of GSTR-3B except the below ITC:

- Ineligible ITC, on account of limitation of time period as delineated in section 16(4) of the CGST Act or

- Ineligible ITC, where the recipient of an intra-State supply is located in a different State than that of place of supply.

2. Permanent Reversal -

Registered person will report reversal of ITC, which are absolute in nature and are not reclaimable in future under Table 4(B)(1), such as on account of 

- Rule 38 (reversal of credit by a banking company or a financial institution),

- Rule 42 (reversal of credit on input or input services, if the same is used in supply of exempted goods or services or used for non-business purposes), 

- Rule 43 (reversal of credit on capital goods, if the same is used in supply of exempted goods or services or used for non-business purposes), or

- Ineligible credit u/s 17(5) of the CGST Act.

3. Temporary Reversal - 

Registered person will report reversal of ITC, which are not permanent in nature and can be reclaimed in future under Table 4(B)(2), such as on account of 

- Rule 37 of CGST Rules (reversal of credit due to non-payment of consideration to supplier within 180 days), 

- Section 16(2)(b) (reversal of credit on account of non-receipt of goods or services in the same tax period in which the invoice has been received)

- Section 16(2)(c) (reversal of credit on account of non-payment of tax by the supplier).

Such ITC may be reclaimed in Table 4(A)(5) on fulfilment of necessary conditions. Further, all such reclaimed ITC shall also be shown in Table 4(D)(1) in that particular month.

Table 4(B)(2) may also be used by registered person for reversal of any ITC availed in Table 4(A) in previous tax periods because of some inadvertent mistake.

4. Therefore, the net ITC Available will be calculated in Table 4(C) which is as per the formula (4A - [4B(1) + 4B(2)]) and same will be credited to the ECL of the registered person.

5. As the details of ineligible ITC under section 17(5) are being provided in Table 4(B)(1), no further details of such ineligible ITC will be required to be provided in Table 4(D)(1).

6. ITC not available, on account of limitation of time period as delineated in section 16(4) of the CGST Act or where the recipient of an intra-State supply is located in a different State than that of place of supply, to be reported by the registered person in Table 4D(2). Such details are available in Table 4 of GSTR-2B.

7. It is clarified that the reversal of ITC of ineligible credit u/s 17(5) or any other provisions of the CGST Act and rules thereunder is required to be made under Table 4(B) and not under Table 4(D) of GSTR-3B.

8. It is also to be noted that Table 4(D) of GSTR-3B is only for reporting purpose. Its effect is not taken into net ITC to be credited to ECL.

Example:

1. Suppose Mr. A has below ITC in GSTR-2B for Nov 2022. 

Details

IGST

CGST

SGST

ITC on Import of goods

2,00,000

-

-

ITC on Import of Services

-

-

-

ITC on Inward Supplies under RCM

-

50,000

50,000

ITC on Inward Supplies from ISD

1,00,000

-

-

ITC on other inward supplies

3,00,000

2,00,000

2,00,000

Total

6,00,000

2,50,000

2,50,000

 

2. Now lets assume, Mr. A after reconciliation, finds below adjustments which needs to be done in GSTR-3B as compared to GSTR-2B:

S. No.

Adjustment Required to be done in ITC

IGST

CGST

SGST

(A) ITC reflecting in GSTR-2B and auto-populated in GSTR-3B by GSTN.

1

ITC required to be reversed which is barred u/s 17(5) of CGST Act.

20,000

10,000

10,000

2

ITC required to be reversed under rule 42 and 43 of the CGST Rules.

30,000

15,000

15,000

3

ITC reversal due to invoice received but supply not received during the month.

5,000

4,000

4,000

4

ITC required to be reversed under rule 37 of CGST Rules due to non-payment to supplier within 180 days.

8,000

9,000

9,000

(B) ITC reflecting in GSTR-2B but not auto-populated in GSTR-3B by GSTN.

5

Ineligible ITC on account of limitation of time period as delineated in section 16(4) of CGST Act.

7,000

5,000

5,000

6 Ineligible ITC, where the recipient of an intra-State supply is located in a different State than that of place of supply. 4,000 3,000 3,000
(C) Other ITC to be claimed (but not reflecting in GSTR-2B).
7 ITC on Import of Services  1,00,000 - -
8 ITC on Inward Supplies under RCM e.g. RCM paid on Advocate Fee, RCM on Residential Rent etc. - 25,000 25,000
9 ITC reversed in previous months under Rule 37 on account of non-payment to supplier within 180 days. (Payment done now and ITC to be claimed in current month) 10,000 8,000 8,000
10 ITC on Import of Goods (Subject to BE fetched by GSTN from ICEGATE) 70,000 - -

 

3. Based on the above adjustments, the correct reporting to be done by Mr. A in GSTR-3B should be as follows:

Correct Reporting in Table 4 of GSTR-3B 4. Eligible ITC Details .......
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Author:

TaxReply


Nov 24, 2022

Comments


1.-What to be shown under Table 4(D)(1)....Plz clarify it in details....and

2.-Any ITC which is not taken in previous periods due to 16(2)(b) or 16(2)(c) and now we are eligible to take it, then it need to be shown only under 4(A)(5) only or somewhere else also...... Plz explain .......

Thanks......................
By: Shankar Maheshwari | Dt: Nov 24, 2022
Replied to SHANKAR MAHESHWARI
Any ITC which was temporarily reversed in previous months and are being reclaimed in current month are to be shown in 4A(5) and 4D(1).
By: Taxreply | Dt: Nov 25, 2022


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