A DETAILED PRESENTATION ON

ELECTRONIC CREDIT REVERSAL &

RE-CLAIMED STATEMENT [‘ECRRS’]
In August 2023, the GSTN
introduced the ECRRS Ledger to
monitor temporary ITC reversals
and reclaims. This change was
rooted in updates brought in
July 2022. Our presentation
breaks down the reasons for 0

introducing ECRRS, how it

works, and its significance.

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BACKGROUND
JULY 2022
NOTIFICATION NO. 14/2022 – Central Tax dated 05 July 22
Circular No. 170/02/2022-GST, dated 06 July 2022

❑ In July 2022, the CBIC rolled out key changes in the FORM GSTR-3B to
address the discrepancies and challenges in reporting Input Tax Credit
(‘ITC’) details. These reforms were aimed at enabling taxpayers to submit
accurate ITC information, especially related to reversals and reclaims
❑ For a better understanding of the changes related to reversal and reclaim
of ITC, we have reproduced ITC Table 4 of GSTR – 3B and highlighted the
relevant portion of the said table along with a short description

Table
0
Description
ref.
Temporary reversal of
4(B)(2) ITC for not meeting
specific conditions
ITC that was reversed
can be reclaimed once
4(A)(5)
the specific conditions
are met

All ITC reclaimed above

4(D)(1)
needs to be disclosed

In the next slides, we have explained the relevant provisions which

require temporary reversal of ITC, along with illustrations

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Scenarios requiring reversal under Table 4(B)(2)
Non-receipt of goods / services in the same tax period in which the
invoice has been received (Section 16(2)(b)):
If the goods or services aren't received in the same tax period as that of the
invoice, the ITC needs to be reversed. However, it can be reclaimed in the period
when the goods or services are actually received.

Example: A business ordered machinery valued at ₹1,00,000 with GST of

₹18,000 (@18%) in March. However, due to challenges in logistics, the
machinery was received in April.
Reporting in GSTR-3B of respective months:

0 Month wise
reporting
March April
₹18,000 ₹18,000

₹18,000 -

- ₹18,000

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Scenarios requiring reversal under Table 4(B)(2)
Non-payment of consideration to the supplier within 180 days (Second
proviso to Section 16(2) read with Rule 37):
If the consideration for a supply is not paid within 180 days, the ITC availed on
such supply is required to be reversed and can be reclaimed once the payment
is made

Example: A business procured software services with an invoice value of

₹1,00,000 in January, with GST amounting to ₹18,000 (@18%). However, the
payment remained unpaid until July, which exceeded 180 days from the
invoice date. The payment was made to the supplier in September.
Reporting in GSTR-3B of respective months:

Month wise
reporting
Jan July Sept
₹18,000 - ₹18,000

- ₹18,000 -

- ₹18,000

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Scenarios requiring reversal under Table 4(B)(2)
Non-payment of tax by the supplier (Section 16(2)(c) read with Rule 37A):

In case the supplier fails to file GSTR-3B till 30th Sept of next FY, the recipient
who initially claimed the ITC would need to reverse the ITC. Once the supplier
complies, the ITC can be reclaimed by the recipient​

Example: The business procured raw materials of ₹1,00,000 in February with

GST ₹18,000 (@18%). Later, in September it was discovered that the supplier
hasn’t filed GSTR – 3B return of February. However, subsequently in the
month of December the Supplier filed the said return.
Reporting in GSTR-3B of respective months:

Month wise
reporting
Feb Sept Dec
₹18,000 - ₹18,000

- ₹18,000 -

- ₹18,000

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INTRODUCTION OF ECRRS LEDGER
In accordance with the manner outlined in Circular No. 170/02/2022-GST,
taxpayers who initially availed ITC in Table 4(A)(5) : ‘All other ITC’, are required
to reverse the temporary ITC in Table 4(B)(2) : ‘Others’ arising out of the
scenarios explained in the above slides. Further, upon meeting the conditions
specified in the said scenarios, taxpayers are then eligible to reclaim the ITC
again in Table 4(A)(5) : ‘All Other ITC’. Additionally, the reclaimed amount needs
to be duly reported in Table 4(D)(1) : ‘ITC reclaimed which was reversed under
Table 4(B)(2) in an earlier tax period'.

AUGUST 2023
❑ The GSTN introduced ECRRS Ledger along with a detailed advisory in the
month of August 2023. Prior to the 0 introduction of the ECRRS, taxpayers
manually handled the reporting of ITC reversals and reclaims in Table 4 of
the GSTR-3B return.
❑ This was largely based on self-declarations, without an effective mechanism
for tax authorities to verify or validate whether a claimed ITC indeed
corresponded to a previously reversed ITC.
❑ This gap has now been bridged by the ECRRS Ledger. The ECRRS Ledger
enables easy monitoring of ITC reversals and reclaims by the taxpayers. It
also grants tax authorities upfront visibility into the balance of ITC reversals &
the maximum eligible amount for reclaims on any given date
❑ The ECRRS system became available for monthly filers in the return period
of August 2023. Meanwhile, those who file quarterly returns have been able
to use it from the return period of July-September 2023.

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HOW does ECRRS LEDGER WORK?
❑ ECRRS Ledger will maintain record of ITC reversed in Table 4(B)(2) & ITC
reclaimed in Table 4(A)(5) based on ITC reported in Table 4(D)(1) to ensure
that reclaimed ITC aligns with the reversed amounts, promoting overall
consistency in ITC reversed & reclaimed related transactions.
❑ If taxpayers tries to re-claim ITC in Table 4(A)(5) more than what has already
been reversed in Table 4(B)(2), then GSTR-3B form will have a validation
check that will alert the taxpayers that they are trying to reclaim more ITC
than previously reversed.
❑ We have illustrated how ECRRS prevents taxpayers from reclaiming more ITC
than they have already reversed.
GSTR – 3B months
Particulars 0

Apr [₹] Aug [₹] Dec [₹] Feb [₹]

Opening balance of ITC available to re-
- 1,00,000 70,000 20,000
claim in current tax period
Add ITC reversed in Table 4(B)(2) 1,00,000 50,000 - -

ITC re-claimed in Table 4(A)(5)

Less & reported as reclaimed in - 80,000 50,000 40,000
Table 4(D)(1)

Closing balance of ITC available to re-

claim in next tax period
1,00,000 70,000 20,000 *
* In February the taxpayer is trying to re-claim ITC more than the balance
available to re-claim. Accordingly, GSTR – 3B will show a validation error while
filing the GSTR-3B return for the month of February.
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ONE TIME opportunity to declare opening re-claimable ITC
❑ As discussed earlier, the function of ECRRS ledger became live from August
2023 for monthly filers and July – September return for quarterly filers.
❑ However, to report the opening balance of re-claimable ITC which was
reversed prior to introduction of ECRRS ledger, the GSTN portal has provided
a one-time opportunity to report the opening balance within a specified
time limit along with certain conditions:

TIMELINE & CONDITIONS TO REPORT OPENING BALANCE

Until 30th Nov 2023:

❑ Taxpayers can declare their opening balance for ITC reversal

❑ Amendment facility available up to maximum 3 times for any mistake
After 30th Nov 2023 till 31st Dec 2023:
0

❑ Only amendments will be permitted.

❑ The option for fresh reporting will not be available.

After 31st Dec 2023:

The amount will be frozen, & no fresh reporting/amendment will be allowed

ACTION TO BE TAKEN BY THE TAXPAYER TO REPORT RE-

CLAIMABLE OPENING BALANCE:
Every taxpayer should check their previous records to determine if any ITC was
reversed based on the scenarios highlighted in the previous slides. These
reversals can be re-claimed once specific conditions are met. Taxpayers must
maintain records of these reversals for GST department’s verification.

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WHERE TO REPORT RE-CLAIMABLE OPENING ITC ON GST PORTAL ?

We hope our presentation has been helpful in learning about ECRRS Ledger
Follow GSTinSHORT on 21 October 2023 I 09
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A knowledge-sharing initiative to explain various GST concepts,

changes etc., in, a 𝗦𝗛𝗢𝗥𝗧, 𝗦𝗜𝗠𝗣𝗟𝗘 and 𝗘𝗔𝗦𝗬 𝗧𝗢 𝗨𝗡𝗗𝗘𝗥𝗦𝗧𝗔𝗡𝗗 manner
Disclaimer: The information provided in this presentation is intended for informational purposes only and should not be interpreted as
professional advice or a recommendation by GSTinSHORT or NMNP & Associates LLP, Chartered Accountants. Neither the author, the
firm, nor its affiliates will be held liable for any losses or damages resulting from the use of this information or any actions based on it.

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