GST Advisory on Electronic Credit Reversal and Reclaimed Statement

GST Advisory on Electronic Credit Reversal and Reclaimed Statement has been issued on 29-12-2025. GSTN has now informed that negative balances and excess ITC availment will soon be blocked at the system level, and GSTR-3B filing will not be allowed unless discrepancies are corrected.

To ensure correct reporting of Input Tax Credit (ITC) reversals, reclaims, and Reverse Charge Mechanism (RCM) transactions, GSTN has introduced two system-based statements on the GST portal. These statements track ITC reversals/reclaims and RCM liability/ITC on a period-wise basis to prevent excess or incorrect availment of ITC.

This statement was introduced from August 2023 onwards. Its purpose is to track ITC that is temporarily reversed in Table 4(B)(2) of GSTR-3B and later reclaimed in Table 4(D)(1) (and earlier Table 4(A)(5)). It helps ensure that ITC is reclaimed only to the extent it was actually reversed earlier.

Initially, even if a taxpayer reclaimed more ITC than available in this ledger, the system only gave a warning and still allowed filing of GSTR-3B. To regularise past data, taxpayers were given multiple opportunities to declare opening balances of previously reversed but unreclaimed ITC.

The statement can be viewed on the GST portal under:
Dashboard → Services → Ledger → Electronic Credit Reversal and Re-claimed Statement.

RCM Liability / ITC Statement (RCM Ledger)

To track RCM transactions accurately, the RCM Liability/ITC Statement was introduced from August 2024 onwards. This statement captures:

RCM liability declared in Table 3.1(d) of GSTR-3B, and
Corresponding ITC claimed in Table 4A(2) and 4A(3).

If a taxpayer claims RCM ITC in excess of the RCM liability paid plus the available balance in the RCM ledger, the system issues a warning. Taxpayers were also given multiple chances to declare or correct opening balances for past RCM-related excesses.

This statement can be accessed through:
Dashboard → Services → Ledger → RCM Liability/ITC Statement.

New System Validation Being Implemented :

GSTN has now informed that negative balances and excess ITC availment will soon be blocked at the system level, and GSTR-3B filing will not be allowed unless discrepancies are corrected.

For ITC Reclaim Ledger:

The ITC reclaimed in Table 4(D)(1) must not exceed:

Closing balance of the ITC Reclaim Ledger, plus
ITC reversed in Table 4(B)(2) of the same return period.

For RCM Ledger

RCM ITC claimed in Table 4A(2) and 4A(3) must not exceed:

RCM liability paid in Table 3.1(d) of the same return, plus
Closing balance available in the RCM Ledger.

What if the Closing Balance is Already Negative?

Negative balance in ITC Reclaim Ledger

A negative balance means excess ITC was reclaimed earlier. In such cases, GSTR-3B will be blocked unless the taxpayer mandatorily reverses the excess ITC in Table 4(B)(2) of the current return. If sufficient ITC is not available, the reversed amount will automatically be added to the tax liability for that period.

Negative balance in RCM Liability/ITC Statement

A negative balance indicates excess RCM ITC claimed earlier. To file GSTR-3B, the taxpayer must either: