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GST payers get notices to first present irreversible ITC after which reverse, specialists advise warning in submitting Nov GSTR-3B


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New Delhi, November 17

States GST authorities have issued notices to assessee for furnishing of right and correct info of ineligible Enter Tax Credit score (ITC) and reversal. That is vital as final likelihood to avail missed ITC for fiscal yr 2021-22 by submitting of GST return type ‘3B’ is November 20. Consultants say non compliance may end in penalty of ₹20,000 or extra per return.

Kind GSTR-3B exhibits summarised figures of gross sales, ITC claimed, and web tax payable. In August 2022 , Central Board of Oblique Taxes & Customized (CBIC) issued an in depth clarification on reporting of details about reversal of ITC in addition to ineligible ITC. Now, whole ITC (eligible in addition to ineligible), is being auto-populated from assertion in Kind GSTR-2B in several fields of Desk 4A of Kind GSTR-3B.

Report reversal

The registered individual is required to report reversal of ITC, which is absolute in nature and isn’t reclaimable, such as on account reversal of credit score by a banking firm or a monetary establishment, reversal on enter and enter companies on account of provide of exempted items or companies and so forth, in Desk 4 (B) (1) of GSTR-3B. They may even be required to report reversal of ITC, which isn’t everlasting in nature and may be reclaimed in future in Desk 4(B)(2). The online ITC obtainable shall be calculated in Desk 4 (C), which is as per the system (4A -[4B (1) + 4B (2)]) ,and identical shall be credited to the digital credit score ledger (ECL) of the registered individual.

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Based mostly on this round, notices are being issued. businessline has seen two such notices – one by Punjab GST Division and one other by West Bengal. Discover by Punjab authorities knowledgeable the assessee about giant portion of unclaimed IGST ITC and stated “This has led to lack of income for Authorities of Punjab.” With this, it requested to adjust to the round. Discover issued by West Bengal authorities too requested the taxpayer to do the identical.

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Ineligible ITC

Explaining the entire difficulty, Vivek Jalan, Companion with Tax Join Advisory says the GSTR-3B submitting course of has gone by an entire overhaul.  Now, the whole ITC reflecting within the GSTR-2B of a taxpayer (comparable to GSTR-1 filed by its suppliers), must be accounted for, in Desk 4A of GSTR-3B when filed by the taxpayer. Thereafter, in case any of the ITC is ineligible, the taxpayer has to reverse it in Desk 4B. Say, in case a taxpayer in Haryana takes a mediclaim coverage for which ITC is ineligible, it has to first avail the ITC in Desk 4A after which present it as a reversal in Desk 4B.

“That is required as a result of the income can be flowing to t Haryana to the extent of the ITC proven as reversal of Desk 4B of GSTR-3B of the taxpayer. In case the whole ITC shouldn’t be recognised in any respect, this income can be distributed among the many States within the ratio of their collections. Therefore, the larger States like Maharashtra would acquire and smaller ones would free out on account of decrease ratio of collections vis-a-vis the larger states,” he stated.


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