In a bid to simplify compliance and provide better visibility to the regulator, the Goods and Services Tax Network (GSTN) has introduced an all-new ledger to track the reversal and reclamation of the Input Tax Credit (ITC). Known as Electronic Credit and Re-claimed Statement (ECRS), it will provide taxpayers with the balance of all input tax credit that has been reversed and reclaimed on a particular date.
In a bid to simplify compliance and provide better visibility to the regulator, the Goods and Services Tax Network (GSTN) has introduced an all-new ledger to track the reversal and reclamation of the Input Tax Credit (ITC). Known as Electronic Credit and Re-claimed Statement (ECRS), it will provide taxpayers with the balance of all input tax credit that has been reversed and reclaimed on a particular date.
What are the next steps that taxpayers need to take?
As an immediate next step, taxpayers must report the accumulated ITC reversed balance as a one-time action. The same will need to be done by 30th November 2023.
"For monthly filers, the ITC reversed until the July 2023 return period will need to be reported, whereas for quarterly filers until the April to June 2023 return period. Between 30th November and 31st December 2023, taxpayers will only be allowed to amend their opening balance up to a maximum of three times. Post 31st December 2023, the option to amend the opening balance will also be withdrawn," said Archit Gupta, Founder and CEO, ofClear.
Taxpayers can access the ledger and report opening balances in two ways.
1) log in to GST portal >> Go to 'Report ITC Reversal Opening Balance'
2)Go to 'Services' from the homepage >> Go to 'Ledger' >> Click on 'Electronic Credit Reversal and Re-claimed Statement' >> Click on 'Report ITC Reversal Opening Balance'
Archit Gupta listed five essential measures that will help taxpayers manage ITC reversals and reclaim better
-A thorough reconciliation is to be done from April 2022 till date to determine ITC claimed, reversed, reclaimed, ineligible ITC, and pending reclaims and arrive at the opening balance for the ITC reversal statement.
-A separate ledger is to be created in the books of accounts, if not practiced earlier, for all ITC reversals and reclaims going forward.
-A separate ledger in the books of accounts is to be created for temporary ITC reversals without mixing them up with permanent ITC reversals or ineligible ITC.
-A trail of all ITC claimed, reversed, and reclaimed is to be maintained to be able to map the ITC reclaims back to the initial ITC claims and be audit-ready.
-Frequent reconciliations of GSTR-2B vis-à-vis GSTR-3B and purchase register must be conducted across tax periods to avoid double reclaims or missing reclaims.
Meanwhile, as per a report in PTI, the GST Network has enabled geocoding functionality for the 'additional place of business' address of GST-registered businesses across all states and union territories. The move is aimed at curbing fraudulent registrations under Goods and Services Tax (GST) by giving bogus addresses for the purpose of claiming ITC.