Taxpayers To Be Barred From Filing GSTR-3B Return For Excess GST ITC Claims: GSTN Issues Advisory

In the advisory issued on December 29, 2025, GSTN stated that negative balances and excess ITC availment will no longer be permitted in the Electronic Credit Reversal and Re-claimed Statement (ITC Reclaim Ledger) and the RCM Liability/ITC Statement. The system will enforce hard validations at the time of filing GSTR-3B, replacing the current warning-only mechanism.

Under the proposed validation, ITC reclaimed in Table 4(D)(1) of GSTR-3B will be allowed only up to the combined amount of the closing balance reflected in the ITC Reclaim Ledger and the ITC reversed in Table 4(B)(2) for the same return period. Any attempt to reclaim ITC beyond this limit will result in blocking of return filing.

Similarly, RCM ITC claimed in Tables 4(A)(2) and 4(A)(3) will be restricted to the aggregate of RCM liability discharged in Table 3.1(d) for the relevant period and the closing balance available in the RCM Liability/ITC Statement. GSTN clarified that taxpayers claiming RCM ITC beyond this threshold will not be permitted to file GSTR-3B.

The advisory further states that taxpayers already reflecting negative closing balances in either ledger must first regularise the discrepancy. In cases of excess ITC reclaim, taxpayers will be required to reverse such ITC in Table 4(B)(2) of the current return, failing which the amount will be added to output tax liability. Where negative balances arise in the RCM ledger, taxpayers must either pay additional RCM liability or correspondingly reduce the ITC claimed in the current return.

The GSTN has also issued the following FAQs regarding the same: –

“1. How to view my Electronic Credit Reversal and Re-claimed Statement?

You can view the statement by navigating to the Dashboard › Services › Ledger › Electronic Credit Reversal and Re-claimed.

2. How to view my RCM Liability/ITC Statement?

You can view the RCM Liability/ITC Statement by navigating to the Dashboard › Services › Ledger › RCM Liability/ITC Statement.

3. What will be changed in the GSTR-3B in respect of Electronic Credit Reversal and Re-claimed Statement?

Shortly, taxpayer will not be able to file their GSTR-3B in case the ITC claimed in Table 4D(1) exceeds the closing balance in the Electronic Credit Reversal and Re-claimed Statement (ITC reclaim ledger) and the ITC reversed in Table 4B(2) of the current return period putting together.

4. How to file GSTR-3B if the closing balance of Electronic Credit Reversal and Re-claimed Statement (ITC reclaim ledger) is already Negative?

If the closing balance of the ITC reclaim ledger is negative, it indicates that excess ITC was reclaimed earlier. Therefore, to file GSTR-3B, you must reverse the excess claimed ITC in Table 4B(2) of the respective return period, up to the amount of the negative closing balance. This will allow you to correct the discrepancy and proceed with filing the return. In case there is no ITC available, this reversal declared in table 4(B)2 will be added to your liability in the current period while filing GSTR-3B.

Example: The closing balance of the ITC reclaim ledger for the current return period is -₹10,000, which means ₹10,000 of excess ITC has been reclaimed in earlier periods. To file your GSTR-3B, you would need to reverse this earlier excess reclaimed ITC of ₹10,000 in Table 4B(2) for the current period.

5. How will the validation mechanism work in GSTR-3B for RCM Liability/ITC Statement?.

The taxpayers will not be able to file GSTR-3B in case the claimed RCM ITC in Table 4A(2) or 4A(3) exceeds the available balance in the RCM Liability/ITC Statement and the RCM liability reported in Table 3.1(d) for the current return period put together.

6. How to file GSTR-3B if the closing balance of RCM Liability/ITC Statement is Negative?

If the closing balance of the RCM Liability/ITC Statement is negative, it indicates that excess RCM ITC has been claimed earlier. To proceed with filing, you must either pay the outstanding RCM liability in Table 3.1(d) or reduce the ITC being claimed in Table 4A(2) or 4A(3) in the current return period, equivalent to the amount of the negative closing balance. Once the discrepancy is corrected, you will be able to file your return.

Example:

Let's assume that the closing balance of the RCM Liability/ITC Statement is -₹5,000. This means that ₹5,000 of excess RCM ITC has been claimed earlier. To resolve this and file your GSTR-3B, you can:

1. Pay the RCM liability: You can pay additional ₹5,000 in Table 3.1(d) for the current return period to cover the excess ITC claimed.

OR

2. Reduce the ITC claimed: You can reduce ₹5,000 from the RCM ITC in Table 4A(2) or Table 4A(3) for the same period, if RCM ITC is available more than ₹5,000 in the current period.

Once either the excess RCM liability is paid or the requisite ITC is reduced from available ITC to match the available negative closing balance, the discrepancy will be resolved, and you can proceed with filing your return.”