The Central Board of Indirect Taxes and Customs (CBIC) has issued instructions on the mandatory furnishing of ineligible/blocked Input Tax Credit (ITC) and the reversal thereof in Form GSTR-3B. These instructions are meant to ensure that taxpayers are not claiming ITC in violation of the GST rules.
According to the instructions, taxpayers are required to provide details of ineligible ITC, including ITC on goods or services used for personal consumption, in a separate table in Form GSTR-3B. Ineligible ITC may also include ITC claimed on exempt supplies, goods or services used for non-business purposes, and ITC on goods or services used for activities that are not taxable under GST.
Taxpayers are also required to provide details of blocked ITC in the same table, which includes ITC on goods or services that are blocked under GST law. Blocked ITC may include ITC on motor vehicles and other conveyances, food and beverages, membership of clubs, health and life insurance, and travel benefits to employees.
The instructions also require taxpayers to reverse any ineligible/blocked ITC claimed in earlier tax periods in Form GSTR-3B for the current tax period. The reversal of ITC must be done separately in the electronic credit ledger for CGST, SGST, and IGST.
These instructions are meant to ensure that taxpayers are compliant with GST rules and are not claiming ITC that is not eligible under the law. Failure to comply with these instructions may result in penalties and interest charges.
The procedure to be followed for furnishing information regarding input tax credit availed, reversal thereof, and ineligible input tax credit in Table 4 of FORM GSTR-3B is as follows:
1. In Table 4(A) of FORM GSTR-3B, the taxpayer has to furnish the details of the total input tax credit availed in the current tax period.
2. In Table 4(B) of FORM GSTR-3B, the taxpayer has to furnish the details of the input tax credit that needs to be reversed. This may include the following:
1. Reversal of credit due to non-payment of consideration within 180 days from the date of the invoice.
2. Reversal of credit due to non-filing of the return by the supplier.
3. Reversal of credit due to excess credit availed or utilized.
4. Reversal of credit due to the purchase of exempt supplies.
3. In Table 4(C) of FORM GSTR-3B, the taxpayer has to furnish the details of the ineligible input tax credit. This may include the following:
1. Input tax credit on goods and services used for personal consumption.
2. Input tax credit on goods and services used for making exempt supplies.
3. Input tax credit on goods and services used for making taxable supplies outside India.
4. Input tax credit on goods and services used for non-business purposes.
4. The taxpayer has to compute the amount of input tax credit to be reversed and the amount of ineligible input tax credit separately and enter the same in Table 4(B) and 4(C) of FORM GSTR-3B, respectively.
5. The amount of input tax credit to be reversed will be debited from the electronic credit ledger of the taxpayer.
6. Once the details of input tax credit availed, reversal thereof, and ineligible input tax credit are furnished in Table 4 of FORM GSTR-3B, the taxpayer has to self-assess the tax liability and pay the same in Table 6 of FORM GSTR-3B.
It is important for taxpayers to furnish the correct details of input tax credit availed, reversal thereof, and ineligible input tax credit in FORM GSTR-3B to avoid any penalties or interest.
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