GSTN Introduces Electronic Credit Reversal And Reclaimed Statement

The Goods and Service Tax Network (GSTN) has introduced the Electronic Credit Reversal and Reclaimed Statement.

The government introduced certain changes in Table 4 of Form GSTR-3B so as to enable the taxpayers to report correct information regarding ITC availed, ITC reversal, ITC reclaimed, and ineligible ITC. The re-claimable ITC earlier reversed in Table 4(B)2 may be subsequently claimed in Table 4(A)5 on fulfilment of the necessary conditions. The 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 reversals and reclaims thereof and to avoid clerical mistakes, a new ledger, namely the Electronic Credit and Reclaimed Statement, is being introduced on the GST portal. This statement will help the taxpayers track their ITC that has been reversed in Table 4B(2) and thereafter reclaimed in Tables 4D(1) and 4A(5) for each return period, starting with the August return period.

The statement shall facilitate that while reclaiming ITC in GSTR-3B, the amount aligns appropriately with the corresponding reversed ITC. This aims to improve the overall consistency and correctness of ITC reversals 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.

With the provision for taxpayers to report their accumulated ITC reversal balance, the portal will subsequently maintain a record of reversal and reclaimed amounts on a return-period basis in the statement. Hence, a validation mechanism is incorporated into the GSTR-3B form.

The validation will trigger a warning message if a taxpayer attempts to reclaim excess ITC in Table 4D(1) over the available ITC reversal balance in the statement, along with ITC reversals made in the current return period in Table 4B(2).

The warning message would facilitate accurate reporting, but taxpayers would still have the option to proceed with filing. However, the taxpayers are advised not to reclaim ITC exceeding the closing balance of "Electronic Credit Reversal and Reclaimed Statement" and may report their pending reversed ITC, if any, as ITC reversal opening balance.

Date: 31/08/2023

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