INELIGIBLE ITC IN GSTR3B

[SIVARAMA KUMAR]

Dear experts,

In GSTR 3B return, any amount shown in ineligible ITC column ( not reversed ) where will it get reflected. The EC ledger remain the same and no liability is reduced in GSTR-2A, also. however it gets added to the ITC claimed for the month. when viewed in the provisional claimed and eligble ITC summary.

Please clarify

[Ganeshan Kalyani]

Can you please elaborate the query a bit more.

[Guest]

Dear SivaRama Kumar,

1. Ineligible ITC shown in Table 4D of GSTR 3B will not have any impact on "Electronic credit ledger". It is just a disclosure part. Only 4A and 4B will impact "Electronic credit ledger".

2. Coming to ITC comparison with 2A, Portal is giving facility "ITC credit claimed and due" wherein it is adding values in 4A with 4D and then comparing with 2A.

3. In my view, in order to get correct reconciliation with 2A and correct values in electronic credit ledger, ineligible credit has to be included in Table 4A (5), deducted from 4B and then disclosed in Table 4D. This will give correct disclosure in "Electronic credit ledger" and proper reconciliation with 2A aswell.

[SIVARAMA KUMAR]

Dear Maruthi ram,

As correctly said in order to reconcile with GSTR 2A, A portion of the credit which has been already declared by the dealer is now shown as ineligble ITC . Since the dealer has not reversed the same no impact in the electronic ledger will justify his declaration.

In my view it should not be added to the eligible ITC summary but should be reduced from the available credit in GSTR-2A, which would cast the liability on the dealer, that he has not made reversal of the credit after declaring it GSTR 3B. and would automatically restrict his claim subject to the Eligible credit in 2A as per the new regulations.

AI Summary

Ineligible Input Tax Credit not reflected in electronic credit ledger; reconcile returns by adjusting disclosures for accurate ITC. Ineligible Input Tax Credit reported in the GSTR 3B disclosure column does not affect the Electronic Credit Ledger and functions only as a disclosure; the portal's comparison tool may add disclosed ineligible amounts to credited entries when comparing claimed ITC with purchase records, producing reconciliation differences. To correct ledger and return reconciliation a taxpayer should include the ineligible amount in the credited entries, effect the corresponding deduction, and then disclose it as ineligible ITC so that available credit and reconciliation with purchase records align.