Ineligible ITC reversed but reflected in ITC reclaim ledger - how to rectify
This query is : Resolved
17 March 2025
Sir,
One of my friend has reversed the Ineligible ITC in 3B return under Table 4(B)2 - Others. Now,
the reversed amount is being shown in Electronic Credit reversal and Re-claim statement.
He tried to reclaim the said amount through Table 4(D)(1) and reverse it through 4(B)1, but the tax payable is getting hiked to that extent.
How to rectify this ? Or, shall we leave it as it is, as we have not availed the ITC literally.
Pls. advice.
One of my friend has reversed the Ineligible ITC in 3B return under Table 4(B)2 - Others. Now,
the reversed amount is being shown in Electronic Credit reversal and Re-claim statement.
He tried to reclaim the said amount through Table 4(D)(1) and reverse it through 4(B)1, but the tax payable is getting hiked to that extent.
How to rectify this ? Or, shall we leave it as it is, as we have not availed the ITC literally.
Pls. advice.
12 August 2025
What’s Happening Here?
Your friend reversed ineligible ITC in Table 4(B)(2) (Others) in GSTR-3B.
This reversal reflects in the Electronic Credit Ledger as a reversal.
Later, when trying to reclaim the same ITC in Table 4(D)(1) (Reclaim of ITC), it gets added back, and then reversed again in 4(B)(1) (Reversal of ITC), causing the tax payable to increase unnecessarily.
Why does tax payable increase?
When you reclaim ITC through 4(D)(1), the credit is added back to your ledger, but to keep books balanced, if you again reverse it immediately via 4(B)(1), you’re effectively paying tax again on the same amount.
How to fix or handle this situation?
1. Confirm actual ITC status:
If your friend has not physically availed or utilized that ITC amount (it was reversed without claiming), then there is no need to reclaim and reverse again.
Just leave it as reversed in 4(B)(2). Don’t try to reclaim it unnecessarily.
2. Do NOT reclaim if you haven’t availed the credit:
Since the ITC was reversed and not claimed, reclaiming it just complicates matters and increases tax liability unnecessarily.
3. If ITC was claimed and used:
Then reclaim and reverse properly with correct calculation of tax and interest.
Recommendation
Leave it as is if ITC was never availed, i.e., reversal made correctly in 4(B)(2) and no actual credit taken.
Trying to reclaim and reverse again without using the credit leads to higher tax payment.
Just ensure that reversal entries are consistent with actual ITC utilized.
Your friend reversed ineligible ITC in Table 4(B)(2) (Others) in GSTR-3B.
This reversal reflects in the Electronic Credit Ledger as a reversal.
Later, when trying to reclaim the same ITC in Table 4(D)(1) (Reclaim of ITC), it gets added back, and then reversed again in 4(B)(1) (Reversal of ITC), causing the tax payable to increase unnecessarily.
Why does tax payable increase?
When you reclaim ITC through 4(D)(1), the credit is added back to your ledger, but to keep books balanced, if you again reverse it immediately via 4(B)(1), you’re effectively paying tax again on the same amount.
How to fix or handle this situation?
1. Confirm actual ITC status:
If your friend has not physically availed or utilized that ITC amount (it was reversed without claiming), then there is no need to reclaim and reverse again.
Just leave it as reversed in 4(B)(2). Don’t try to reclaim it unnecessarily.
2. Do NOT reclaim if you haven’t availed the credit:
Since the ITC was reversed and not claimed, reclaiming it just complicates matters and increases tax liability unnecessarily.
3. If ITC was claimed and used:
Then reclaim and reverse properly with correct calculation of tax and interest.
Recommendation
Leave it as is if ITC was never availed, i.e., reversal made correctly in 4(B)(2) and no actual credit taken.
Trying to reclaim and reverse again without using the credit leads to higher tax payment.
Just ensure that reversal entries are consistent with actual ITC utilized.
14 August 2025
Sir, thank you so much.
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