Clarification on furnishing Correct Information in GSTR 1 and GSTR 3B and Amendment in GSTR 3B

Return filing under Goods and Service Tax (“GST”) is a key element and it is necessary to furnish correct information in returns. Department has taken all possible steps to simplify the process of return filing by providing the feature of auto-population of data in GST returns.

With effect from December 2020, FORM GSTR-3B gets auto-generated on the portal. ITC amount gets auto-populated from FORM GSTR-2B (auto-generated inward supply statement). Outward supply and corresponding GST Liability gets auto-populated from FORM GSTR-1 (Outward supply statement), with an editing facility to the registered person.

However, the Department has observed that taxpayers are not reporting correct information in certain columns of GSTR-1 and GSTR-3B and therefore, creating trouble for the government in correct account and accurate settlement of funds between the Central and State Governments.

To clarify the issue,  the CBIC has issued Circular No. 170/02/2022 – GST dated 06.07.2022 mandatory furnishing of correct and proper information of inter-State supplies and amount of ineligible/blocked Input Tax Credit and reversal thereof in return in FORM GSTR-3B and statement in FORM GSTR-1 in the following manner:

A. Furnishing of information regarding inter-State supplies made to unregistered persons, composition taxable persons, and UIN holders:

Issue:

• Inter-state supplies made to unregistered persons are required to be reported Place of Supply (PoS) wise in:
  • Table 7 (B2C (Others)) or Table 5A & 5B (B2C (Large) Invoices) of GSTR-1 and 
  • Table 3.2 (Out of supplies made in 3.1 (a) above, details of inter-state supplies made) of GSTR-3B. Figures reported in Table 3.2 are already included in Table 3.1 (Details of Outward supplies and inward supplies liable to reverse charge)  of GSTR-3B.

• Supplies made to composition dealers and UIN holders are required to be declared GSTIN-wise in:
  • Table-4A (B2B, SEZ, DE Invoices) of GSTR-1 and 
  • Table 3.2 (Out of supplies made in 3.1 (a) above, details of inter-state supplies made) of GSTR-3B. Figures reported in Table 3.2 are already included in Table 3.1 (Details of Outward supplies and inward supplies liable to reverse charge)  of GSTR-3B.

• However, Department has noticed that a number of registered persons are not reporting the correct details of inter-State supplies made to unregistered persons, composition dealers,s and UIN holders In table 3.2 of FORM GSTR-3B on a notion that the same has been already reported in table 3.1 of FORM GSTR-3B.
• Even addresses of unregistered persons are captured incorrectly, especially those belonging to banking, insurance, finance, stock broking, telecom, digital payment facilitators, OTT platform services providers E-commerce operators, etc. Incorrect Place of Supply is declared in both the Tax invoice and Table 3.2 of GSTR-3B.
• For ease purpose, the Information in Table 3.2 of GSTR-3B gets auto-populated on the basis of details furnished in Form GSTR-1.

Clarification:

• Since reporting of correct place of supply is significant for correct distribution of funds between center and state government, Department has clarified that:

1. Inter-state supply to an unregistered person should be correctly reported Place of Supply wise in:
   1. Table 3.2 of GSTR-3B or 
   2. Table 7 or Table 5B or Table 9/10 (Amendment of B2B Invoices) of GSTR-1. 

2. Inter-State supplies to composition dealers or UIN holders should be reported Place of Supply wise in:
   1. Table 3.2 of FORM GSTR-3B and
   2. Table 4A or 4C or 9 of FORM GSTR-1

3. Further, amendments carried out in Table 9 or Table 10 of FORM GSTR-1 or any entry in Table 11 of FORM GSTR-1 relating to such supplies should also be given effect while reporting the figures in Table 3.2 of FORM GSTR-3B.

• Also, registered persons are advised to shall update their customer database properly with the correct State name and should make sure that the correct PoS is declared in the tax invoice and GST returns so that tax reaches the Consumption State as per the principles of the destination-based taxation system.

B. Furnishing of information regarding ITC availed, reversal thereof, and ineligible ITC in Table 4 of GSTR-3B

• Information about Input Tax Credit (ITC) claimed during the tax period is reported in Table 4 of GSTR-3B in the following manner:

A. ITC Available (whether in full or part)
Import of Goods
Import of services
Inward supplies liable to reverse charge (other than 1 & 2 above)
Inward supplies from ISD
All other ITC
B. ITC Reversed
As per rules 42 & 43 of CGST Rules
Others
C. Net ITC available (A-B)
D. Ineligible ITC
As per section 17(5)
Others

Issue:

• Table 4(A) is getting auto-populated from various entries of FORM GSTR-2B.
• However, reversals of ITC on account of rule 42 and 43 of the CGST Rules or for any other reasons is required to be computed by the registered person and should be reported in Table 4(B).
• Department has observed that different practices are being followed to report ineligible ITC as well as various reversals of ITC in FORM GSTR-3B. 
• It may be noted that the amount of Net ITC Available as per Table 4(C) gets credited into the electronic credit ledger (ECL) of the registered person. 
• Therefore, it is important that any reversal of ITC or any ITC which is ineligible under any provision of the CGST Act should not be part of Net ITC Available in Table 4(C) and accordingly, should not get credited into the ECL of the registered person.
• GSTR-2B:
  • Facility of static month-wise auto-drafted FORM GSTR-2B has been introduced from August 2020.
  • GSTR-2B provides invoice-wise details of ITC available including ITC on account of import of goods. 
  • Details of the said statement are auto-populated in Table 4 of GSTR-3B. However, the same is editable in the hands of a registered person. 
  • Entire data available in FORM GSTR-2B is carried to table 4 in FORM GSTR-3B except ITC is not available to the registered person either on account of the limitation of time period or where the recipient of an intra-State supply is located in a different State / UT than that of a place of supply. 
  • It is pertinent to mention that system is not unable to identify ineligible ITC and therefore, such amount forms part of eligible/available ITC auto-population of Table 4(A) of FORM GTSR-3B.
  • Registered person is required to identify ineligible ITC as well as the reversal of ITC on its own to arrive at the Net ITC available, which is to be credited to the ECL. 

Clarification

Accordingly, Department has clarified that the registered person should follow the following procedure for correct reporting of information in the return:

• Total ITC auto-populated in Table-4A contains both eligible as well as ineligible ITC. However, it does not contain ITC ineligible on account of:

• limitation of a time period as delineated in section 16(4) of the CGST Act or 
• where the recipient of an intra-State supply is located in a different State / UT than that of the place of supply. E.g. Registered person is located in state of Delhi and a supplier located in Haryana states mentions Haryana as a place of supply and report his supplies as Intra-state supply.

• Registered person will report reversal of ITC in table 4B(1), which are absolute in nature and are not reclaimable, such as:

• Rule 38 (reversal of credit by a banking company or a financial institution), 
• Rule 42 (reversal on input and input services on account of supply of exempted goods or services), 
• Rule 43 (reversal on capital goods on account of supply of exempted goods or services) of the CGST Rules and 
• ITC ineligible under section 17(5)

• Registered person will report reversal of ITC in Table-4B(2) which are not permanent in nature and can be reclaimed in the future subject to fulfillment of specific conditions such as:

• Rule 37 of CGST Rules (non-payment of consideration to the supplier within 180 days), 
• section 16(2)(b), and section 16(2)(c) of the CGST Act.
• Such ITC may be reclaimed in Table 4(A)(5) on fulfillment of necessary conditions. 
• Table 4(B)(2) may also be used for the reversal of any ITC which was availed in Table 4(A) in previous tax periods because of some inadvertent mistake.

• Therefore, the net ITC Available will be calculated in Table 4(C) which is 4A – [4B(1) + 4B(2)]) and the same will be credited to the ECL of the registered person.

• Therefore, even though a specific column is provided for ITC ineligible u/s 17(5), details of such ineligible ITC are provided in Table 4(B). Since such ITC is already given in Table 4(B) such ineligible ITC is not to be disclosed again in Table 4(D)(1).

• ITC not available, on account of the limitation of time period or where the recipient of an intra-State supply is located in a different State / UT than that of a place of supply, may be reported in Table 4D (2). Such details are available in Table 4 of FORM GSTR-2B.

• Accordingly, it is clarified that the reversal of ITC of ineligible credit under section 17(5) or any other provisions of the CGST Act and rules thereunder is required to be made under Table 4(B) and not under Table 4(D) of FORM GSTR-3B.

Example:

Particulars	IGST	CGST	SGST
ITC Autopopulating in Table 4A(5)	2,00,000	1,50,000	1,50,000
ITC Time Barred u/s 17(5) (Included Above)	50,000	0	0
Reversal of ITC required under Rule 42 & 43	75,500	52,000	52,000
Invoice with respect to which supply is not received	10,000	0	0
ITC reversal as payment is not made within 180 days under Rule 37	0	500	500
ITC is ineligible due to the period of limitation specified u/s 16(4) (Not Included in Auto Populate Amount)	0	10,000	10,000

Disclosure in Table 4 of GSTR-3B

(5) All other ITC	2,00,000	1,50,000	1,50,000	Auto-populated from GSTR-2B
B. ITC Reversed
(1) As per rules 42 & 43 of CGST Rules	1,25,500	52,000	52,000	Includes:a. ITC ineligible u/s 17(5) and b. ITC reversed under Rule 42 & 43
(2) Others	10,000	500	500	Includes:a. ITC reversal due to non-payment within 180 days b. ITC with respect to invoice for which material is not received
C. Net ITC available (A-B)	64,500	97,500	97,500
D. Ineligible ITC
(1) As per section 17(5)	–	–	–	Note: Ineligible ITC will not be disclosed here. Disclosure is already made in table 4B(1)
(2) Others	0	10,000	10,000	ITC is ineligible due to the period of limitation specified u/s 16(4)

C. Amendments in GSTR-3B to report supplies on which GST was payable by e-commerce operator (N/No. 14/2022–Central Tax dated 05.07.2022) 

• Liability of payment of GST has been shifted to e-commerce operators in various cases from persons selling through e-commerce platforms by virtue of Section 9(5) of CGST Act.
• Till now, no separate column was provided in GSTR-3B to report supplies on which GST was payable by an e-commerce operator under Section 9(5) of CGST Act. Therefore, suppliers were struggling to disclose such figures in GSTR-3B.
• Now, a separate Table 3.1.1. Has been inserted in GSTR-3B to report such supplies.