Overview
There is considerable ambiguity among taxpayers regarding the two GSTN system statements-(i) the Electronic Credit Reversal and Reclaimed Statement (ITC Reclaim Ledger) and (ii) the RCM Liability/ITC Statement (RCM Ledger)-which have been introduced to standardise return reporting, minimise clerical errors, and prevent excess availment of input tax credit. The regulatory framework for these mechanisms is anchored in Notification No. 14/2022-Central Tax dated 05.07.2022, and has been further clarified through CBIC Circular No. 170/02/2022-GST dated 06.07.2022.
In recent months, the GST portal has been displaying warning messages where taxpayers attempt to reclaim ITC or avail RCM-related ITC in excess of the available balance reflected in the GSTN system statements. While such warnings have so far been non-blocking and taxpayers have generally been able to proceed with filing Form GSTR-3B, GSTN has now formally communicated that hard validations will be activated "shortly". Once enabled, these validations will result in system-level blocking of GSTR-3B filing in cases where (i) the relevant ledger reflects a negative balance, or (ii) ITC is being claimed beyond the permissible balance available as per the ledger mechanism.
In this context, GSTN has issued key advisories that are critical for compliance:
GSTN Advisory dated 23.08.2024 - "Introduction of RCM Liability/ITC Statement" (RCM Ledger)
Legal nature: GSTN system statement advisory.This statement has been introduced to track and regulate Reverse Charge Mechanism (RCM) reporting and credit availment by mapping:
1. RCM liability reported/paid in Table 3.1(d) of GSTR-3B; with
2. Corresponding RCM ITC claimed in Table 4(A)(2) and 4(A)(3) of GSTR-3B.
Further, GSTN has clarified that the opening balance in the RCM Ledger may appear as:
· Positive, where excess RCM liability was paid earlier but the corresponding ITC was not availed; or
· Negative, where excess RCM ITC was availed earlier without corresponding discharge of RCM liability.
GSTN Advisory & FAQ dated 29.12.2025 - Hard Validations and Filing Blocks
Legal nature: GSTN compliance control advisory (portal validation switch-on).GSTN has clarified that the system is transitioning from a warning-based regime to a validation-based regime, as under:
1. Earlier: warning messages were displayed, but filing was allowed.
2. Now: "shortly", the portal will not permit negative values or excess ITC availment beyond ledger balances, and GSTR-3B filing will be blocked wherever validations fail.
Two key validation equations announced by GSTN
(A) ITC Reclaim Validation (Table 4(D)(1))The ITC reclaimed in Table 4(D)(1) must be less than or equal to:[Closing balance of ITC Reclaim Ledger + ITC reversed in Table 4(B)(2) of the current return period]
(B) RCM ITC Validation (Tables 4(A)(2) / 4(A)(3))The RCM ITC claimed in Table 4(A)(2) and Table 4(A)(3) must be less than or equal to:[RCM liability paid in Table 3.1(d) of the same return period + Closing balance of the RCM Ledger]
Consequences where ledger is already negative (filing will be blocked until corrected)
· Negative ITC Reclaim Ledger: taxpayer must mandatorily reverse the excess ITC through Table 4(B)(2). If ITC is insufficient in the current period, such a reversal will increase the liability while filing GSTR-3B.
· Negative RCM Ledger: taxpayer must either (i) pay additional RCM liability in Table 3.1(d) equivalent to the negative balance, or (ii) reduce the ITC claim in Table 4(A)(2)/(3) to the permitted extent.
We will discuss each aspect of the above framework in detail, from every relevant perspective, so that the purpose and reporting requirements of each table/field ("tab") are clearly understood and applied correctly in Form GSTR-3B and the corresponding GSTN system statements. This will help ensure error-free compliance, avoid excess ITC availment, and prevent any disruption in return filing due to portal validations.
If you have any questions or require clarification after reading the complete article, please feel free to contact us at the contact details provided at the end of the article.
1) What has been introduced and from which return periods
1.1 Electronic Credit Reversal and Re-claimed Statement (ITC Reclaim Ledger)
Purpose: Tracks temporary / reclaimable ITC reversals reported in GSTR-3B Table 4(B)(2) and their subsequent re-claim (reported in Table 4(A)(5)) with mandatory disclosure in Table 4(D)(1).
Applicability (as per GSTN):
- Monthly filers: from August 2023 return period
- Quarterly filers (QRMP): from July-September 2023 quarter
Portal navigation (viewing + opening balance):Services → Ledger → Electronic Credit Reversal and Re-claimed Statement(plus facility to Report ITC Reversal Opening Balance)
1.2 RCM Liability/ITC Statement (RCM Ledger)
Purpose: Tracks linkage between:
- RCM liability paid/reported in GSTR-3B Table 3.1(d), and
- RCM ITC claimed in Table 4(A)(2) and 4(A)(3) (RCM inward supplies).
Applicability (as per GSTN advisory):
- Monthly filers: from August 2024
- Quarterly filers (QRMP): from July-September 2024 quarter
Portal navigation:Services → Ledger → RCM Liability/ITC Statement
2) Statutory and return-format foundation (why these tables/ledgers exist)
2.1 Why Table 4(B)(2) and 4(D)(1) matter (reclaimable reversals + disclosure)
The ITC reclaim ledger operationalises reclaimable reversal concepts embedded in:
- CGST Act, s.16 (ITC eligibility/conditions)
- CGST Rules, Rule 37 (reversal on non-payment within 180 days; re-availment upon payment)
- CBIC Circular 170/02/2022-GST (06.07.2022) (classification of reversals and disclosure discipline)
The key compliance design is:
- Permanent/non-reclaimable reversals and blocked credits → Table 4(B)(1)
- Reclaimable reversals (e.g., Rule 37; certain s.16 condition-linked reversals) → Table 4(B)(2)
- Reclaim is taken in Table 4(A)(5) and must be disclosed in Table 4(D)(1).
Additionally, Table 4 labels/format were structurally enabled by Notification 14/2022-CT and implemented through GSTN portal advisories.
2.2 Why the RCM ledger ties Table 3.1(d) with 4(A)(2)/(3)
RCM is rooted in:
- CGST Act, s.9 (reverse charge) and
- CGST Act, s.49 (payment/credit utilisation framework).
The RCM ledger is a system control to ensure RCM ITC is not availed beyond what is supported by RCM liability (current period liability + carried forward ledger balance).
3) Instrument-wise framework (each Notification / Circular / Advisory relevant to the topic)
Strictly speaking, only one is a CBIC "Notification"; the rest are CBIC Circular / GSTN Portal Advisories (procedural + system validations).
3.1 CBIC Notification No. 14/2022 - Central Tax dated 05.07.2022
Legal nature: Statutory notification amending CGST Rules / return format, issued under Section 164 of the CGST Act, 2017; effective from publication.
(A) What it "tells" for GSTR-3B ITC reversal/reclaim (Table 4)
This notification changes the labels/buckets in Table 4 so that:
1. 4(B)(1) becomes the bucket for non-reclaimable / permanent reversals:"As per rules 38, 42 and 43 of CGST Rules and sub-section (5) of section 17".
2. 4(D) heading is replaced to "Other Details".
3. 4(D)(1) is defined as:"ITC reclaimed which was reversed under Table 4(B)(2) in earlier tax period".
4. 4(D)(2) is defined as:"Ineligible ITC under section 16(4) and ITC restricted due to PoS provisions".
Practical implication: This is the statutory foundation for the later portal control that reclaim in 4(D)(1) must never exceed the reversal pool tracked via 4(B)(2).
(B) What it "tells" for RCM-related reporting (reverse-charge adjacent, not the RCM Ledger)
Notification 14/2022 inserts Table/para 3.1.1 in GSTR-3B for supplies covered by Section 9(5) (tax paid by e-commerce operator) and adjusts headings so 3.1 excludes 3.1.1.This is not the August-2024 "RCM Ledger" functionality (that comes via GSTN advisory).
3.2 CBIC Circular No. 170/02/2022-GST dated 06.07.2022
Legal nature: Clarificatory circular explaining how to fill the amended Table 4.
1. ITC reversal buckets:
o Permanent/non-reclaimable reversals (Rule 38/42/43 + s.17(5)) → 4(B)(1)
o Reclaimable/temporary reversals (Rule 37; s.16(2)(b)/(c)) → 4(B)(2)
2. Reclaim reporting:Reclaim is taken in 4(A)(5) and must also be shown in 4(D)(1).
3. Net ITC computation:Net ITC available = 4A - [4B(1) + 4B(2)], credited to ECL.
3.3 GSTN Portal Advisory dated 02.09.2022 - "Changes in Table 4 of GSTR-3B"
Legal nature: GSTN operational advisory aligning taxpayers to Table-4 structure.
What it tells:
- Reclaimable reversals in 4(B)(2) → later reclaim in 4(A)(5) + disclosure in 4(D)(1).
- ITC "not available" per GSTR-2B to be reflected in 4(D)(2).
3.4 GSTN Advisory- "Introducing Electronic Credit Reversal and Re-claimed Statement" (ITC Reclaim Ledger) (Aug-2023 onwards)
Legal nature: GSTN system statement advisory
1. Ledger tracks ITC reversed in 4(B)(2) and reclaimed/disclosed via 4(A)(5) + 4(D)(1).
2. Opening balance facility provided for pending reversals.
3. At that stage validation generally worked as warning-only when reclaim exceeded available balance, but filing was still allowed.
4) Practical meaning of GSTN advisory points (1 to 11) - operational summary
1. Reclaim ledger ensures correct reporting of 4(B)(2) reversals and reclaim via 4(A)(5) + 4(D)(1).
2. Currently warnings appear for excess reclaim, but filing has been allowed.
3. Opening balance opportunities were given; incorrect/non-reporting increases risk of future blocks.
4. Reclaim ledger path: Dashboard/Services → Ledger → Reclaim Statement.
5. RCM ledger introduced to track 3.1(d) and 4(A)(2)/(3).
6. Warning appears if RCM ITC exceeds (RCM closing + current 3.1(d)).
7. Opening balance facility exists for RCM ledger too.
8. RCM ledger path: Services → Ledger → RCM Liability/ITC Statement.
9. Hard validations announced "shortly" (two equations above).
10. Negative balances will block filing until cured (reverse/pay/reduce).
11. GSTN references detailed advisories/pdfs for both statements.
5) FAQ-wise compliance answers (ready guidance)
1. How to view ITC Reclaim Ledger?
Dashboard/Services → Ledger → Electronic Credit Reversal and Re-claimed.
2. How to view RCM Ledger?
Services → Ledger → RCM Liability/ITC Statement.
3. What change in GSTR-3B for reclaim?
Filing will be blocked if 4(D)(1) exceeds (reclaim ledger closing + current 4(B)(2)).
4. If Reclaim Ledger is negative?
Reverse the excess in 4(B)(2); if no ITC, reversal converts into liability while filing.
5. Validation for RCM ledger?
Filing will be blocked if RCM ITC exceeds (RCM ledger closing + current 3.1(d)).
6. If RCM Ledger is negative?
Either pay additional RCM in 3.1(d) or reduce ITC in 4(A)(2)/(3)
Conclusion
The GSTN's introduction of the Electronic Credit Reversal and Re-claimed Statement (ITC Reclaim Ledger) and the RCM Liability/ITC Statement (RCM Ledger) marks a decisive shift from return-based reporting to ledger-driven controls in Form GSTR-3B. While the portal has so far permitted filing with warning messages, the advisory dated 29.12.2025 makes it clear that hard validations will be activated shortly, and GSTR-3B filing will be blocked where (i) reclaimed ITC or RCM ITC exceeds the permissible ledger-backed limits, or (ii) either ledger carries a negative balance unless corrected through the prescribed reversal/payment adjustments. Accordingly, taxpayers must ensure disciplined reporting in the relevant tables-4(B)(2), 4(A)(5), 4(D)(1) for reclaimable ITC, and 3.1(d), 4(A)(2), 4(A)(3) for RCM-supported by proper working papers and periodic ledger reconciliation, so that no inadvertent excess claim results in system blockage or downstream litigation exposure.
The author can also be reached at varunmukeshgupta96@gmail.com
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