Relevance of the ITC reversal opening balance Tab on GST portal

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A new functionality “Reporting the ITC Reversal opening balance” has been introduced in the GST portal on 31/08/2023. The advisory reads as, 

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

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.

3. Taxpayers may report their opening balance until 30th November 2023. After 30th November 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.

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

5. After 31st December 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.

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

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.

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.

The advisory can be traced to the insertion of Rule 88D of the CGST Rules, 2017 via NOTIFICATION NO. 38/2023- Central Tax dated 04th August 2023. Rule 88D relates to the “Manner of dealing with difference in input tax credit available in auto-generated statement containing the details of input tax credit and that availed in return.”

The rule provides that when the variance between the claim available in Form GSTR 2A and ITC claimed in GSTR 3B exceeds by a percentage notified by the council, the Registered Person will be given intimation in Form GST DRC 01C – Part A. The said intimation will be available electronically in the portal and a copy of the same will be sent to the E-Mail address of the said taxpayer. 

Further, the intimation provides us with two options. 

Option 1 – Pay an amount equal to the excess claim with interest as provided in Section 50 of the CGST Act, 2017 through DRC 03 and furnish a reply in Part B of Form DRC 01C in the portal itself. 

Option 2 – To furnish a reply specifying the reasons for excess claim 

It is to be noted that a taxpayer can avail both the options for one intimation as the payment in DRC 03 can be fully or partially of the amount of demand raised in the intimation. But due care is to be taken, as the rule provides that, if the reply is not furnished within 7 days of the intimation or if the proper officer is not satisfied with the reasons provided thereof, proceedings as per Section 73 or 74 of the CGST Act, 2017 shall be initiated by the proper officer. 

Relevance of the ITC reversal opening balance Tab: 

The declaration of the accumulated credits that are yet to be reclaimed becomes crucial as the claim made will be adjusted against the ledger Electronic Credit Reversal and reclaim statement. Hence, if the ledger shows a nil balance, then the same are to be proved by the taxpayer as the burden of proof as per Section 155 of the Act, 2017 is on the tax payer. Not disclosing a correct opening balance can end up in proceedings as per Section 73 or 74. Any claim of ITC credit from the reversal made in Row 4B(2) shall be made only if the same is reported within 30th November 2023. The portal provides for amendment till 31/12/2023 after which the balance provided will be frozen by the ledger. The portal provides generously 3 amendments to update the balance. Hence due care and analysis should be made before the balance is provided in the portal. 


- KN Akshaya MA.LLB

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