Goods and Services Tax – Update July 8, 2022

Update Category Reporting of ITC in GSTR 3B and other details in GSTR 1 and GSTR 3B
Update Source Circular No 170/02/2022-GST dated 6th July 2022 Issued by CBIC
Release No. TM/GST/168 dated 8th July 2022

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 -

a. on account of limitation of time period as delineated in sub-section (4) of section 16 of the CGST Act;

b. 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.

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Goods and Services Tax – Update July 8, 2022

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.

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Goods and Services Tax – Update July 8, 2022

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:

S. No Details IGST CGST SGST Total Remarks

1 Import of Goods 1,00,000 - - 1,00,000 Auto-populated in Table 4(A)(1)

2 Import of Services 50,000 - - 50,000

3 ITC on RCM 0 25,000 25,000 50,000 Auto-populated in Table 4(A)(3)

4 ITC from ISD 50,000 0 0 50,000 Auto-populated in Table 4(A)(4)

5 All other ITC 2,00,000 1,50,000 1,50,000 5,00,000 Auto-populated in Table 4(A)(5)

6 Total ITC 4,00,000 1,75,000 1,75,000 7,50,000

Notes –

1. Of the other inward supplies of All other ITC (row 5), ITC of IGST is barred under section 17(5) of Rs. 50,000/-

2. Reversal on account of Rule 42 and 43 is required of Rs. 75,500/- (IGST) Rs. 52,000/- (CGST and SGST each)

3. All other ITC (Row 5) includes supply not received during April, 2022 for IGST of Rs. 10,000/-

4. ITC of Rs 500/- each under CGST and SGST has been reversed under Rule 37 i.e. not payment within 180 days

5. 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 -

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Goods and Services Tax – Update July 8, 2022

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:

Form GSTR 3B
Details IGST CGST SGST Remarks

Table 4 – Eligible ITC

1 2 3 4

(A) ITC available

(whether in Full or Part)

1. Import of Goods 1,00,000 - -

2. Import of Services 50,000 - -

3. ITC on RCM (other 0 25,000 25,000

than 1 and 2 above)

4. ITC from ISD 50,000 0 0

5. All other ITC 2,00,000 1,50,000 1,50,000

(B) ITC reversed/

Reduced

1. Reversal of ITC as per 1,25,500 52,000 52,000Ineligible ITC of Integrated tax of Rs. 50,000/-
rule 42 and 43 of CGST under section 17(5) [Note 1]
Rules Reversal of Rs. 75,500/- integrated tax, Rs.
52,000/- central tax and Rs. 52,000/- state tax
under rule 42 and 43 [Note 2]
2. Others 10,000 500 500 Reversal of IGST of Rs. 10,000/-, where supply
is not received [Note 3]
Reversal of ITC of Rs 500/- CGST & SGST each
on account of Rule 37- Non Payment to
suppliers [Note 4]
(C) Net ITC available 2,64,500 1,22,500 1,22,500 C=A1+A2+A3+A4+A5-B1-B2
(A) – (B)

(D) Ineligible ITC

1. As per Sec 17(5) 0 0 0 Reversals u/s 17(5) are not required to be

shown in this row. The same are to be shown
under 4(B)(1) – Permanent Reversal
2. Others 10,000 10,000 Ineligible ITC on account of limitation of time
period as delineated in Sec 16(4), which has
not been auto-populated in Table 4(A) of
GSTR-3B – Permanent reversal

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Goods and Services Tax – Update July 8, 2022

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 –

A. 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;

B. 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.

C. 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.

D. 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.

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TaxMarvel is a Consulting firm focused on providing GST services to small and medium enterprises. We offer host of GST
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in technology and subject matter expertise.
TaxMarvel is founded by Chartered Accountants, Company Secretaries and Management Graduates who have extensive
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leading GST Suvidha Provider (GSP).

Our bouquet of services:

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Development

You can contact us at: Email: support@taxmarvel.com | Mobile No. +91-9903129064 | For GST Updates pls visit our
website www.taxmarvel.com
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Contact – Rohit - +91-9503031788 / Amit - +91-9903129064 Email – Amit@taxmarvel.com