Advisory on Electronic Credit Reversal and Re-claimed Statement

Advisory & FAQ on Electronic Credit Reversal and Re-claimed Statement & RCM Liability/ITC Statement

To ensure accurate reporting of Input Tax Credit (ITC) reversals, reclaims, and Reverse Charge Mechanism (RCM) transactions, the GST Portal has introduced two important ledgers:

Electronic Credit Reversal and Re-claimed Statement (introduced from August 2023 for monthly taxpayers and July-September 2023 quarter for quarterly taxpayers).
RCM Liability/ITC Statement (introduced from August 2024 for monthly taxpayers and July-September 2024 quarter for quarterly taxpayers).

These ledgers track temporary ITC reversals/reclaims and RCM liabilities/ITC respectively, helping avoid errors in GSTR-3B filings.

Key Upcoming Changes

Soon, stricter validations will be enforced to prevent excess ITC availment. Negative values or excess claims beyond available balances will not be permitted in either ledger. This will block GSTR-3B filing until discrepancies are resolved.

1. For Electronic Credit Reversal and Re-claimed Statement

Reclaimed ITC in Table 4(D)(1) of GSTR-3B must be ≤ (Closing balance of the ledger + ITC reversed in Table 4(B)(2) of the current period).
Currently, only a warning is shown for excess reclaims, but filing is allowed.

2. For RCM Liability/ITC Statement

RCM ITC claimed in Table 4(A)(2) & 4(A)(3) of GSTR-3B must be ≤ (RCM liability paid in Table 3.1(d) of the current period + Closing balance of the ledger).
Currently, a warning appears if claims exceed this limit.

Handling Negative Closing Balances

If a ledger shows a negative closing balance (indicating prior excess claims):

Electronic Credit Reversal and Re-claimed Statement:
GSTR-3B filing will be blocked until the excess (negative amount) is mandatorily reversed in Table 4(B)(2) of the current period.
If no ITC is available to reverse in the current period, the reversed amount will be added to your tax liability (payable in cash).
RCM Liability/ITC Statement:
GSTR-3B filing will be blocked until resolved by either:
- Paying additional RCM liability equivalent to the negative balance in Table 3.1(d) of the current period, or
- Reducing ITC claimed in Table 4(A)(2) or 4(A)(3) by the negative amount (if sufficient RCM ITC is being claimed in the current period).

How to View the Ledgers

Electronic Credit Reversal and Re-claimed Statement: Dashboard > Services > Ledger > Electronic Credit Reversal and Re-claimed.
RCM Liability/ITC Statement: Services > Ledger > RCM Liability/ITC Statement.

Taxpayers have previously been provided multiple opportunities to declare/amend opening balances for historical discrepancies in both ledgers.

Recommendations

Review your ledgers immediately on the GST Portal for any negative balances or mismatches.
Correct prior excess claims in upcoming GSTR-3B filings to avoid filing blocks.
For detailed guidelines:
Electronic Credit Reversal and Re-claimed Statement: Refer to GSTN advisory dated 17 September 2024 (PDF Link).
RCM Liability/ITC Statement: Refer to the advisory on GST Portal (Link).

FAQs on Electronic Credit Reversal and Re-claimed Statement & RCM Liability/ITC Statement

How to view the Electronic Credit Reversal and Re-claimed Statement?
Navigate to Dashboard > Services > Ledger > Electronic Credit Reversal and Re-claimed.
How to view the RCM Liability/ITC Statement?
Navigate to Services > Ledger > RCM Liability/ITC Statement.
What changes are coming for reclaiming ITC in GSTR-3B?
Soon, excess reclaim in Table 4(D)(1) beyond the available ledger balance + current reversal in Table 4(B)(2) will block GSTR-3B filing.
How to file GSTR-3B if the Electronic Credit Reversal and Re-claimed Statement shows a negative balance?
Reverse the excess amount (absolute value of negative balance) in Table 4(B)(2) of the current period. If no ITC is available, it will add to your current tax liability.
Example: Closing balance = -₹10,000 → Reverse ₹10,000 in Table 4(B)(2).
How does the validation work for RCM ITC in GSTR-3B?
RCM ITC in Table 4(A)(2)/(3) cannot exceed current RCM liability in Table 3.1(d) + ledger closing balance. Excess will block filing.
How to file GSTR-3B if the RCM Liability/ITC Statement shows a negative balance?
Either pay additional RCM liability in Table 3.1(d) or reduce current RCM ITC claim in Table 4(A)(2)/(3) by the negative amount.
Example: Closing balance = -₹5,000 → Pay ₹5,000 extra in Table 3.1(d) or reduce ITC claim by ₹5,000.