How to report ITC in Form GSTR 3B as per latest circular

There is one joke on GST which says - the volume of circulars & notification weighs more than GST Act itself. Absolutely true that, just relying on GST Act & rules is not sufficient. We would have to refer various circulars and notifications issued on time to time by CBIC to be 100% compliant.

There has been many changes made in GSTR 3B from the inception to make GSTR 3B more effective tool to collect taxes.

It has been observed by CBIC is that different practices are being followed to report ineligible ITC as well as various reversals of ITC in GSTR-3B.

In order to bring uniformity in reporting of ineligible and reversal of credits, CBIC has issued a circular (No. 170/02/2022- GST) regarding furnishing of information regarding ITC availed, reversal and ineligible ITC in Table 4 of GSTR-3B.

The recent changes in GSTR 3B has increased the complexity and would require additional efforts and we would have to be more diligent while reporting ITC values in the GSTR 3B.

The existing practice of reporting only eligible ITC which matched with the GSTR-2B does not sustain.

How to report the ITC in GSTR 3B as per recent circular issued by CBIC?

For our ease of understanding, the manner of ITC reporting in GSTR 3B is summarized below.

ITC Available (Table 4A)

Total ITC (Eligible + Ineligible), shall be reported in different fields of Table 4A of GSTR-3B.

Exception

The ineligible ITC on account of limitation (Sec. 16(4)) & ITC in case, place of supply in other States.

ITC Available => Total ITC (Eligible + Ineligible) – ( ITC u/s 16(4) + ITC in case Place of supply in other States)

ITC Reversals (Table 4B(1))

Following ITC reversals shall be reported in Table 4B(1):

• Rule 38 (reversal of credit by a banking company or a financial institution)
• Rule 42 & 43 (reversal on account of supply of exempted goods or services)
• ITC u/s 17(5)

Note: Since the ITC u/s 17(5) are being provided in Table 4(B)(1), no further reporting is required in Table 4(D)(1).

ITC Reversals (Table 4B(2))

Following ITC reversals shall be reported in Table 4B(2):

• Rule 37 of CGST Rules (non-payment of consideration to the supplier within 180 days).
• Section16(2)(b) and section 16(2)(c) (non-payment of tax by the vendor).
• Wrongly availed ITC.

After fulfillment conditions, such ITC may be reclaimed in Table 4(A)(5).

In Eligible ITC (Table 4D(2))

The details available in Table 4 of GSTR 2B shall be reported in Table 4D(2) such as:-

• ITC not available on account of the limitation of the time period as delineated in Sec. 16(4).
• The recipient of an intra-State supply is located in a different State / UT than that of the place of supply.