GSTN Introduces New Ledger – Electronic Credit and Reclaimed Statement For ITC Reversal
GSTN Introduces New Ledger – Electronic Credit and Reclaimed Statement For ITC Reversal
The government of India has introduced amendments in Table 4 of Form GSTR-3B Vide Notification No. 14/2022 – Central Tax dated 05th July 2022 (read with circular 170/02/2022-GST, Dated 6th July 2022).
This change is brought in for the taxpayers to enable them to report correct ITC information. They will be able to report all details of ITC, whether availed, reclaimed, ineligible or reversed in a structured format.
Accordingly,
The reclaimable ITC earlier reversed in Table 4(B)2 may be subsequently claimed in Table 4(A)5 on fulfilment of necessary conditions.
Such reclaimed ITC in Table 4(A)5 must also be explicitly reported in Table 4D(1).
Now, a new statement is being introduced, called the Electronic Credit and Reclaimed Statement, and the primary purpose of this feature is to avoid clerical errors and report correct ITC details which enable the taxpayers and government to track the ITC that has been reversed/reclaimed. It will apply to all taxpayers from the August 2023 return period.
Looking at the onslaught of tax evasion cases occurring in India, the new statement of Electronic Credit Reversal and Reclaimed will help the government keep consistency and accuracy of transactions related to ITC reversal and reclaims. Through this feature, the taxpayers can track their reversed ITC amounts in Table 4B(2) and reclaimed ITC amounts in Table 4D(1) and 4A(5).
The statement is available for return periods for both monthly and quarterly taxpayers starting from August 2023 and Q2, FY 2023-24 (July-September 2023), respectively.
The opening balance of the “Electronic Credit Reversal and Reclaimed Statement” will be the cumulative ITC reversal amount of the taxpayer. Per the rule, they must declare the opening balance for ITC reversal by 30th November 2023.
The monthly and quarterly taxpayers will declare ITC reversals done till July 2023 and April-June 2023, respectively, as their opening balance.
Here, a taxpayer has the option to readjust or change/ correct the wrongly entered opening balance three times until 31st December 2023.
A validation mechanism has been incorporated into the GSTR-3B form, triggering a warning message if a taxpayer attempts to reclaim excess ITC in table 4D (1) than the available ITC reversal balance in the statement along with the reversal made in the current return in the period in Table 4(B)(2).
For monthly and quarterly taxpayers, warning messages start from the August 2023 return period and the July-September 2023 filing period, respectively.
Conclusion
This new feature is a welcome change for taxpayers and authorities alike, and it will help track the wrong ITC reclaims and reversals more accurately and promptly.
GST Portal Link: https://tutorial.gst.gov.in/downloads/news/itc_pending_ledger.pdf
