GST payers get communication to first show irreversible ITC and then reverse
States GST authorities have asked assessees to furnish correct and proper information of ineligible Input Tax Credit (ITC) and reversal. This is critical as last chance to avail missed ITC for fiscal year 2021-22 through filing of GST return form ‘3B’ is November 20. Experts say non-compliance could result in penalty of INR 20,000 or more per return.
Form GSTR-3B shows summarised figures of sales, ITC claimed, and net tax payable. In August 2022 , the Central Board of Indirect Taxes & Customs (CBIC) issued a detailed clarification on reporting of information about the reversal of ITC as well as ineligible ITC. Now, total ITC (eligible as well as ineligible), is being auto-populated from statement in Form GSTR-2B in different fields of Table 4A of Form GSTR-3B.
Report reversal
The registered person is required to report reversal of ITC, which is absolute in nature and is not reclaimable, such as on account reversal of credit by a banking company or a financial institution, reversal on input and input services on account of supply of exempted goods or services etc, in Table 4 (B) (1) of GSTR-3B. They will also be required to report the reversal of ITC, which is not permanent in nature and can be reclaimed in future in Table 4(B)(2). 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 electronic credit ledger (ECL) of the registered person.
Based on this circular, communication have been sent. businessline has seen two communication– one by Punjab GST Department and another by West Bengal. Notice by Punjab government informed the assessee about large portion of unclaimed IGST ITC and said “This has led to loss of revenue for Government of Punjab.” With this, it asked to comply with the circular. Notice issued by West Bengal government too asked the taxpayer to do the same.
