How to Report Your ITC Reversal Opening Balance

1. Taxpayers are permitted to use this facility to report their ITC Reversal Balance that has not been reclaimed.

The Goods and Services Tax (GST) Council has recently announced a new facility for taxpayers to report their Input Tax Credit (ITC) Reversal Balance that has not been reclaimed. This facility is available to all taxpayers, including businesses, individuals, and government agencies.

To report your ITC Reversal Balance, you will need to log in to the GST portal and go to the “ITC Reversal Balance Reporting” section. You will then need to provide the following information:

• Your GSTIN
• The period for which you are reporting the balance
• The amount of the balance
• The reason for the reversal

You can report your ITC Reversal Balance until November 30, 2023. After this date, the option to report the balance will be removed.

You can amend your ITC Reversal Balance up to December 31, 2023. Any reported balance after this date will be considered final and cannot be further amended.

This is a welcome move by the GST Council, as it will help taxpayers to ensure that they are claiming all of the ITC that they are entitled to. It can also help to reduce the number of errors and disputes in the GST system.

Here are some of the reasons why a taxpayer might have an ITC Reversal Balance that has not been re-claimed:

• The taxpayer may have inadvertently reversed the ITC.
• The taxpayer may have been unable to claim the ITC due to a technical error.
• The taxpayer may have been contesting the reversal of the ITC.

Whatever the reason, the new ITC Reversal Balance Reporting Facility will allow taxpayers to report their balance and ensure that they are not losing out on any ITC.

2. The taxpayer is advised to report solely those reclaimable ITC reversal balances that meet the legal criteria for re-claim and have not been previously claimed by the taxpayers.

Only Report Reclaimable ITC Reversal Balances

Reclaimable ITC reversal balances are those that meet the following criteria:

• They are reversals of ITC that were originally claimed in accordance with the GST law.
• They have not been previously claimed.
• They are eligible for re-claim under the GST law.

If a taxpayer reports an ITC reversal balance that is not reclaimable, they may face penalties from the GST authorities.

Here are some of the reasons why an ITC reversal balance may not be reclaimable:

• The ITC was claimed in error.
• The ITC was claimed on ineligible supplies.
• The ITC was claimed in excess of the amount that was actually paid.
• The ITC was claimed after the due date.

Taxpayers should carefully review their ITC reversal balances before reporting them. They should only report balances that they are sure are reclaimable. If they are unsure, they should consult with a GST expert.

3. Taxpayers may report their opening balance until 30th November 2023. After November 30, 2023, the option to report the opening balance will be removed, and it will be assumed that the taxpayer has no ITC Reversal Balance to report.

After November 30, 2023, the option to report the ITC Reversal Balance will be removed. This means that taxpayers who have not reported their ITC Reversal Balance by this date will be assumed to have no ITC Reversal Balance to report.

It is important to note that this deadline applies to all taxpayers, including businesses, individuals, and government agencies. If you are a taxpayer who has an ITC Reversal Balance that you have not yet re-claimed, you need to report it to the GST portal by November 30, 2023.

If you fail to report your ITC Reversal Balance by the deadline, you may face penalties from the GST authorities. The amount of the penalty will depend on the severity of the violation.

To report your ITC Reversal Balance, you will need to log in to the GST portal and go to the “ITC Reversal Balance Reporting” section.

4. Taxpayers may amend their opening balance until December 31, 2023. Any reported balance after this date will be considered final and cannot be further amended.

ITC Reversal Balance Reporting Facility: Amending Your Opening Balance

As you know, taxpayers are allowed to amend their ITC Reversal Balance until December 31, 2023. This means that if you have reported an incorrect balance, you can still correct it before this date. However, it is important to note that any reported balance after this date will be considered final and cannot be further amended.

There are a few reasons why you might need to amend your ITC Reversal Balance. For example, you may have made a mistake in the calculation, or you may have discovered that you are eligible to reclaim a balance that you had previously thought was not eligible.

To amend your ITC Reversal Balance, you will need to log in to the GST portal and go to the “ITC Reversal Balance Reporting” section. You will then need to select the period for which you want to amend the balance and enter the correct amount.

Once you have amended your balance, you will need to submit it for approval. The GST authorities will review your request and approve it if they are satisfied that the amendment is correct.

It is important to amend your ITC Reversal Balance as soon as you realize that it is incorrect. This will help to avoid any penalties from the GST authorities.

5. After December 31, 2023, the updated value shall be frozen with no further attempts provided to the taxpayers to amend their ITC Reversal Balance and this ITC Reversal value will be sent to the Jurisdictional Tax Officer for review.

Important Reminder: ITC Reversal Balance Reporting Deadline is December 31, 2023

After December 31, 2023, the updated value of the ITC Reversal Balance will be frozen and taxpayers will no longer be able to amend it. The frozen value will then be sent to the Jurisdictional Tax Officer for review.

It is important to note that taxpayers should only use this facility if they have an ITC Reversal Balance that is eligible for re-claim but has not yet been re-claimed. If you report a balance that is not eligible for re-claim, you may face penalties from the GST authorities.

Here are some of the reasons why an ITC Reversal Balance may be eligible for re-claim:

• The supply was made by an unregistered supplier.
• The supplier did not issue a valid invoice.
• The supplier did not pay the GST on the supply.
• The goods or services were returned to the supplier.

If you are unsure whether your ITC Reversal Balance is eligible for re-claim, you should consult with a GST expert.

The ITC Reversal Balance Reporting Facility is a new and important tool for taxpayers. It can help taxpayers to ensure that they are claiming all of the ITC that they are entitled to. It can also help to reduce the number of errors and disputes in the GST system.

Here are some tips for reporting your ITC Reversal Balance:

• Make sure that you have all of the required information, such as your GSTIN, the period for which you are reporting the balance, and the amount of the balance.
• Be sure to check the eligibility criteria for re-claim before you report your balance.
• Double-check your entries before you submit them.
• If you need to amend your balance, you can do so up to December 31, 2023.

6. Due diligence should be done while reporting/amending the ITC reversal opening balance, because only 3 time amendment is allowed.

The Importance of Due Diligence When Reporting or Amending the ITC Reversal Opening Balance

However, it is important to note that taxpayers can only amend their ITC reversal opening balance three times. This means that taxpayers need to be very careful when reporting or amending their balance.

There are a few reasons why due diligence is important when reporting or amending the ITC reversal opening balance. First, if a taxpayer reports an incorrect balance, they may face penalties from the GST authorities. Second, an incorrect balance can lead to problems with future GST returns. Third, an incorrect balance can make it difficult to track the taxpayer’s ITC.

To avoid these problems, taxpayers should take the following steps when reporting or amending their ITC reversal opening balance:

• Make sure that the balance is correct. This means carefully reviewing the relevant invoices and documents.
• Get help from a GST expert if you are not sure how to calculate the balance.
• Be sure to keep good records of the reporting or amendment process.

By following these steps, taxpayers can help to ensure that they are reporting or amending their ITC reversal opening balance accurately and avoid any problems with the GST authorities.

Here are some additional tips for taxpayers who are reporting or amending their ITC reversal opening balance:

• Only report or amend the balance once. If you make a mistake, you will need to file a revised return.
• Do not wait until the last minute to report or amend the balance. There may be a backlog of applications, and you may not be able to get your amendment processed in time.
• Keep a copy of the return that you file. This will help you if you need to refer to it in the future.

By following these tips, taxpayers can help to ensure that they are reporting or amending their ITC reversal opening balance smoothly and efficiently.

7. The opening balance that has been reported or amended by the taxpayers shall be credited to the “Electronic Credit Reversal and Re-claimed Statement”. This statement will be used to validate the taxpayer’s ITC Re- claimed amount in Table 4A(5) & 4D(1) of form GSTR-3B.

The Electronic Credit Reversal and Re-claimed Statement

The Electronic Credit Reversal and Re-claimed Statement (ECRRS) is a new statement that will be generated by the GST portal for all taxpayers. This statement will show the taxpayer’s ITC Reversal Balance that has been reported or amended, as well as the amount of ITC that has been re-claimed.

The ECRRS will be used to validate the taxpayer’s ITC Re-claimed amount in Table 4A(5) & 4D(1) of form GSTR-3B. This means that the taxpayer’s ITC Re-claimed amount will only be accepted if it is supported by the ECRRS.

The ECRRS will be available to taxpayers from January 1, 2024. Taxpayers will be able to download the ECRRS from the GST portal.

It is important for taxpayers to keep track of their ITC Reversal Balance and to report any changes to the balance to the GST portal. This will help to ensure that the taxpayer’s ITC Re-claimed amount is accurate and that they are not liable for any penalties.

𝗡𝗼𝘁𝗲: Taxpayers should only utilize this functionality if they have an ITC reversal balance that is eligible for re-claim but has not yet been re-claimed.