How to disclose ITC in GSTR-3B - Circular 170 - the key to consistent disclosures

 CBIC has clarified on reporting of the supplies to end-users, composition taxpayers, and UIN holders as well as on the disclosure of ineligible/blocked input tax credits and reversals thereof.

Although the incorrect or non-disclosure of information in table 3.2 does not have direct implications on the revenue collections and neither does it incentivise the taxpayer in any way, it does affect the revenue sharing between the Centre and the States.

The apportionment of IGST collected on inter-state supplies from the source to the destined State takes place based on information reported in table 3.2. Incorrect or non-disclosure of such information results in:
a.    non-apportionment of the due amount of IGST to the State where such supply takes place; and
b.   a mismatch in the quantum of goods or services supplied in a State and the amount of integrated tax apportioned between the Centre and that State, and consequent non-compliance with the provisions for apportionment of tax and settlement of funds between the Central and the State governments.

In this regard, CBIC has suggested the taxpayers to update the customer database and ensure correct disclosure of place of supply for B2C transactions, as well as to give the effect of amendments and receipt/adjustment of advances on such transactions in table 3.2 of GSTR-3B so that the tax reaches the consumption State as per the underlying principles of the destination-based taxation system.

Coming to a more significant aspect of the Circular, CBIC has clarified on the furnishing of the details pertaining to input tax credits in table 4 to bring uniformity in reporting of ineligible and reversal of credits.

Table 4 of GSTR-3B is auto-populated based on GSTR-2B, and includes all ITC other than that unavailable because of the following two reasons:
a.    limitation period prescribed under Section 16(4), or
b.   the place of supply is located in another State.

Thus, the reduction of input tax credits as per GSTR-2B would be required on account of ineligible ITC or reversals to arrive at ‘Net ITC Available’ which gets credited to the electronic credit ledger - and hence any reversal of ITC or any ITC which is otherwise ineligible cannot be a part of it.

The finer aspects of the disclosure of availment, reversal, and re-availment as well as the ineligible portion of input tax credits are summarised in the table below: