Re-opening of Reporting ITC Reversal Opening Balance: A Step-by-Step Guide

The government has re-opened the reporting of ITC (Input Tax Credit) reversals. Businesses need to follow new steps to comply with this update. In this blog, we’ll explain the changes and how you can report your ITC reversal correctly.

What Has Changed?

In July 2022, the government introduced Notification No. 14/2022 – Central Tax. This update changed Form GSTR-3B for the reversal and reclaiming of ITC. Here’s what’s important:

• You can now reclaim ITC that you reversed earlier in Table 4(B)2 by reporting it in Table 4(A)5 when the conditions are met.
• You must also report this reclaimed ITC in Table 4D(1).

The New Credit Reversal and Reclaimed Statement

To help taxpayers avoid mistakes, a new Electronic Credit Reversal and Reclaimed Statement was launched in August 2023. Monthly taxpayers can use it from the August 2023 return period, and quarterly taxpayers from July-September 2023.

This statement allows you to report the total ITC reversal as an opening balance.

Key Dates to Remember

It’s important to keep track of these dates:

1. Opening Balance ReportingFrom September 15th, 2024 to October 31st, 2024, you can report your ITC reversal as an opening balance.
2. Amendments to the Opening BalanceYou can make changes to the opening balance until November 30th, 2024.
3. Monthly TaxpayersReport your ITC reversal up to July 2023. After this, the balance will be in your ledger.
4. Quarterly TaxpayersReport your ITC reversal up to the April-June 2023 quarter. After this, the balance will be in the ledger.

Why Correct Reporting Matters

From now on, the system will lock the ledger. It will not allow you to reclaim ITC that is higher than the reversed amount. You cannot reclaim more than the available balance in the Electronic Credit Reversal and Reclaimed Statement.

Therefore, make sure all your information is accurate before the deadlines.

Conclusion

Businesses must act quickly to review their ITC reversal. This extended period allows you to report missing information and avoid penalties. Don’t wait until the last moment—ensure everything is accurate.

For detailed guidance, you can check the official advisory here.

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This article is only a knowledge-sharing initiative and is based on the Relevant Provisions as applicable and as per the information existing at the time of the preparation. In no event,?RMPS & Co.?or the Author or any other persons be liable for any direct and indirect result from this Article or any inadvertent omission of the provisions, update, etc if any.