Reporting of ITC Reversal Opening Balance w.e.f 31st August 2023

What is Covered in this article?

1. Screenshot of "Electronic Credit Reversal and Re-Claimed Statement".
2. Where to report Opening Balance for the ledger?
3. Advisory for reporting Opening Balance [ in simple manner as well as issued by department]
4. What is ITC Reversal?
5. Meaning and Presentation of Temporarily ITC Reversal.

1. Screenshot of "Electronic Credit Reversal and Re-Claimed Statement"

Government has launched new ledger, "Electronic Credit Reversal and Re-Claimed Statement".

[Screenshot of the ledger in excel format.]

2. Where to report Opening Balance for the ledger?

For this we will have to report Opening balance, if any, by the facility provided as per below screenshot.

3. Advisory for reporting Opening Balance [in simple manner as well as issued by department]

Let's refer Points in easy manner from Advisory issued by department.

1. If you have reversed any ITC previously in Table 4B(2) which is

• Eligible to re-claim AND
• Yet not re-claimed

You will have to declare.

2. Time limit to report Opening Balance - On or Before 30-11-2023

3. Time limit to amend Opening Balance - on or Before 31-12-2023

• Reported value can be amended 3 Times

4. After 31-12-2023, balance will to sent to Jurisdictional Tax Officer for Review

Please read the following advisory carefully before proceeding ahead for reporting the ITC Reversal opening balance:

1. Taxpayers are permitted to use this facility to report their ITC Reversal Balance that has not been re-claimed.
2. The taxpayer is advised to report solely those reclaimable ITC reversal balances that meet the legal criteria for re-claim and have not been previously claimed by the taxpayers.
3. Taxpayers may report their opening balance until 30th November 2023. After 30th November 2023, the option to report the opening balance will be removed, and it will be assumed that the taxpayer has no ITC Reversal Balance to report.
4. Taxpayers may amend their opening balance until 31st December 2023. Any reported balance after this date will be considered final and cannot be further amended.
5. After 31st December 2023, the updated value shall be frozen with no further attempts provided to the taxpayers to amend their ITC Reversal Balance and this ITC Reversal value will be sent to the Jurisdictional Tax Officer for review.
6. Due diligence should be done while reporting/amending the ITC reversal opening balance, because only 3 time amendment is allowed.
7. The opening balance that has been reported or amended by the taxpayers shall be credited to the "Electronic Credit Reversal and Re-claimed Statement". This statement will be used to validate the taxpayer's ITC Re-claimed amount in Table 4A(5) & 4D(1) of form GSTR-3B.

Note: Taxpayers should only utilize this functionality if they have an ITC reversal balance that is eligible for re-claim but has not yet been re-claimed.

4. Now, what is ITC Reversal?

ITC Reversal is of two types

1. Permanent Reversal - which is to reported under Table 4B (1) "As per rules 38, 42 & 43 of CGST Rules and Sec 17(5)"
2. Temporary Reversal - which is to reported under Table 4B (2) "Others"

Permanent Reversal is not relevant for this discussion. Hence, not discussed here.

5. Meaning and presentation of Temporarily ITC Reversal

Meaning

Some ITCs are reversed temporarily, which can be reclaimed in future, subject to fulfillment of specific condition. Let's us have some examples of temporary reversal of ITC,

• Rule 37 - Reversal of input tax credit in the case of Non-Payment of consideration (within 180 Days). ITC can be reclaimed once payment is made.
• Section 16(2)(b) - Invoice/DN is received but Goods or services is/are not received
• Section 16(2)(c) - Tax has been paid to Government by the supplier [ i.e. Supplier have filled the GSTR 3B]

Note:

1. Such ITC (i to iii) can be reclaimed in Table 4(A)(5) - "All other ITC" on fulfilment of necessary conditions
2. All such reclaimed ITC will have to be shown in Table 4(D)(1), "ITC Reclaimed which was reversed under Table 4(B)(2) in earlier tax period"

Presentation - Temporary Reversal - Table 4B (2) "Others"

Temporary Reversal of ITC is to shown in Table 4B(2) "Others"