Reporting of ITC in GSTR 3B and other details in GSTR 1 and GSTR 3B

The GST Council in their 47th meeting at Chandigarh proposed changes in Form GSTR 3B as well as suggested new disclosure requirements for GSTR 1 and GSTR 3B.

We have summarised the Circular No 170/02/2022-GST dated 6th July 2022 as well as presented the changed Form GSTR 3B for better understanding and clarity -

Mandatory furnishing of correct and proper information of inter-State supplies and amount of ineligible/blocked Input Tax Credit and reversal thereof in return in FORM GSTR-3B and statement in FORM GSTR-1

A. Need for amendment in disclosure requirements in GSTR 3B

Auto Population of details in GSTR 3B commenced with effect from Dec 2020 based on furnishing of GSTR 1 and generation of Form GSTR 2B.

It was observed certain inconsistency in reporting of outward supplies in relation to inter-State supplies made to unregistered person (URD), Composition Tax Payers and UIN Holders.

Also, lack of clarity appears regarding reporting of information about reversal of Input Tax Credit (hereinafter referred to as the "ITC") as well as ineligible ITC in Table 4 of FORM GSTR-3B.

B. Clarification on Furnishing of information regarding ITC availed, reversal thereof and ineligible ITC in Table 4 of GSTR-3B

observed certain inconsistency in reporting of outward supplies in relation to inter-State supplies made to unregistered person

Table 4(A) of the FORM GSTR-3B is getting auto-populated from various entries of FORM GSTR-2B.

However, various reversals of ITC on account of Rule 42 and 43 (Common Credit Reversal) of the CGST Rules or for any other reasons are required to be made, on his own ascertainment, in Table 4(B) of the said FORM.

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

The amount of Net ITC Available as per Table 4(C) of FORM GSTR-3B gets credited into the electronic credit ledger (ECL). Therefore, it is important that any reversal of ITC or any ITC which is ineligible under any provision of the CGST Act should not be part of Net ITC Available

Entire ITC available in FORM GSTR-2B is carried to the table 4 in FORM GSTR-3B, except below details -

• on account of limitation of time period as delineated in sub-section (4) of section 16 of the CGST Act;
• where the recipient of an intra-State supply is located in a different State / UT than that of POS. Example being Tax Payer registered in Telangana and stays in a hotel in Delhi. The ITC appears in GSTR 2B of Tax payer as CGST and SGST but is restricted due to Local supply and POS reported as Delhi.  

C. Procedure to be followed for correct reporting of information in Form GSTR 3B

It may be noted that the ineligible ITC, which was earlier not part of calculation of eligible/available ITC, is now part of calculation of eligible/available ITC in view of auto-population of Table 4(A) of FORM GTSR-3B from various tables of FORM GTSR-2B.

Thereafter, the registered person is required to manually identify ineligible ITC as well as the reversal of ITC to arrive at the Net ITC available, which is to be credited to the ECL.

1. Population of ITC in GSTR 3B (Table 4A) - Total ITC (eligible as well as ineligible) is being auto-populated from FORM GSTR-2B, except for the ineligible ITC on account of limitation of time period as per Sec 16(4); or where the recipient of an intra-State supply is located in a different State / UT than that of POS
2. Non-Reclaimable (Permanent) Reversal to be reported in Table 4(B)(1) of GSTR 3B - ITC reversal permanent in nature which is not to be reclaimed in future i.e. (i) Rule 38 (reversal of credit by a banking company or a financial institution), (ii) Rule 42 & 43 (reversal on input, input services and Capital Goods on account of supply of exempted goods or services) (iii) Ineligible ITC under section 17(5).
3. Reclaimable (non-permanent) Reversal to be reported in Table 4(B)(2) of GSTR 3B - ITC reversal which is not permanent in nature and which is to be reclaimed in future subject to fulfilment of specific conditions i.e. (i) Rule 37 (non-payment of consideration to supplier within 180 days), (ii) section 16(2)(b) (Receipt of goods or services at a later date); (iii) Section 16(2)(c) (Payment of tax by supplier subsequently)
4. Reclaim earlier reversed non-permanent ITC in Table 4(A)(5) of GSTR 3B - Such ITC may be reclaimed in Table 4(A)(5) on fulfilment of necessary conditions. Further, all such reclaimed ITC shall also be shown in Table 4(D)(1). Table 4 (B) (2) may also be used by registered person for reversal of any ITC availed in Table 4(A) in previous tax periods because of some inadvertent mistake.
5. Availment of Net ITC in Form GSTR 3B - The net ITC Available will be calculated in Table 4 (C) which is as per the formula (4A - [4B (1) + 4B (2)]) and same will be credited to the ECL of the registered person. To say total ITC populated (Table 4A) through Form GSTR 2B reduced by Permanent (Table 4(B)(1) and non-permanent (Table 4(B)(2) reversal.
6. Disclosure of Ineligible ITC as per Sec 17(5) - As the details of ineligible ITC under section 17(5) are being provided in Table 4(B) - Reversal, no further details of such ineligible ITC will be required to be provided in Table 4(D)(1).
7. Reporting of non-available ITC through Form GSTR 2B in Table 4D(2) of GSTR 3B - ITC not available, on account of limitation of time period as delineated in Sec 16(4) or POS being in different State, may be reported by the registered person in Table 4D (2). Such details are available in Table 4 of FORM GSTR-2B.
8. Correct disclosure of Reversal of ITC - Disclosure of ineligible credit u/s 17(5) or any other provisions of the CGST Act and rules thereunder is required to be made under Table 4(B) and NOT under Table 4(D) of FORM GSTR-3B.

D. Illustration

A Registered person M/s TaxMarvel LLP is a supplier of goods. He supplies both taxable as well as exempted goods. In a specific month, say April, 2022, he has received input and input services as detailed in Table 1 below.

The details of auto-population of Input Tax Credit on all Inward Supplies in various rows of Table 4 (A) of FORM GSTR-3B are shown in column (7) of the Table 1 below:

Notes -

• Of the other inward supplies of All other ITC (row 5), ITC of IGST is barred under section 17(5) of Rs. 50,000/-
• Reversal on account of Rule 42 and 43 is required of Rs. 75,500/- (IGST) Rs. 52,000/- (CGST and SGST each)
• All other ITC (Row 5) includes supply not received during April, 2022 for IGST of Rs. 10,000/-
• ITC of Rs 500/- each under CGST and SGST has been reversed under Rule 37 i.e. not payment within 180 days
• An amount of ITC of Rs 10,000/- each under CGST and SGST being ineligible on account of limitation of time period as per Sec 16(4), has not been auto-populated in Table 4(A) of FORM GSTR-3B from GSTR-2B.

Disclosure of ITC - Form GSTR 3B format

Solution - Based on the facts mentioned in Table 1 above, M/s TaxMarvel LLP is required to avail ITC after making necessary reversals in Table 4 of FORM GSTR-3B as detailed below:

E. Furnishing of information regarding inter-State supplies made to URD, composition persons and UIN holders

It has been noticed that a number of taxpayers are not reporting the correct details of inter-State supplies made to URD, Composition Taxpayers and UIN holders, as required to be declared in Table 3.2 of FORM GSTR-3B. For assisting the registered persons, Table 3.2 of FORM GSTR-3B is being auto-populated on the portal based on the details furnished by them in their FORM GSTR-1.

It is also noticed that the address of URD person are incorrectly captured, especially those belonging to banking, insurance, finance, stock broking, telecom, digital payment facilitators, OTT platforms and E-com operators, leading to wrong declaration of Place of Supply (PoS) in the invoices and in Table 3.2 of FORM GSTR-3B.

Advisory for Tax Payers making Inter-State Supplies

1. Supplier made to the URD persons - Taxpayers shall also report the details of such supplies, POS-wise, in Table 3.2 of FORM GSTR-3B and Table 7B or Table 5 or Table 9/10 of FORM GSTR-1, as the case may be;
2. Supplier made to Composition persons and UIN Holders - Taxpayers shall also report the details of such supplies, place of supply-wise, in Table 3.2 of FORM GSTR-3B and Table 4A or 4C or 9 of FORM GSTR-1, as the case may be, as mandated by the law.
3. Update database with correct POS - Taxpayers to update their customer database properly with correct State name and ensure that correct PoS is declared in the tax invoice and in Table 3.2 of FORM GSTR-3B while filing their return, so that tax reaches the Consumption State as per the principles of destination-based taxation system.
4. Amend GSTR 3B Table 3.2 when making amendment of POS in GSTR 1 - Any amendment carried out in Table 9 or Table 10 of FORM GSTR-1 or any entry in Table 11 of FORM GSTR-1 relating to such supplies should also be given effect to while reporting the figures in Table 3.2 of FORM GSTR-3B.