Tax, GST & International Trade Blog

To tighten controls around Input Tax Credit (ITC) reporting and reduce clerical and excess-claim errors, GSTN has progressively introduced system-driven ITC tracking statements on the GST portal.

Two key ledgers are now operational:

1. Electronic Credit Reversal and Re-claimed Statement (ITC Reclaim Ledger)
2. RCM Liability/ITC Statement (RCM Ledger)

While these ledgers were initially introduced with soft validations (warning messages), GSTN has now clarified that hard validations will be implemented shortly, restricting filing of Form GSTR-3B where excess ITC is reclaimed or availed beyond available balances.

This marks a clear shift from disclosure-based compliance to ledger-controlled ITC regulation.

Electronic Credit Reversal and Re-claimed Statement (ITC Reclaim Ledger)

Purpose and Introduction

To ensure accurate reporting of temporarily reversed ITC and its subsequent reclaim, GSTN introduced the Electronic Credit Reversal and Re-claimed Statement:

• From August 2023 onwards for monthly filers
• From July–September 2023 quarter for quarterly filers

The statement captures:

• ITC reversed in Table 4(B)(2) of GSTR-3B
• ITC reclaimed in Table 4(A)(5) and Table 4(D)(1)

Multiple opportunities were provided to taxpayers to declare opening balances relating to reversals done prior to the introduction of this ledger.

Current System Behaviour

At present:

• If a taxpayer attempts to reclaim ITC in Table 4(D)(1) exceeding the available balance in the ITC reclaim ledger,
• The system shows a warning,
• But still allows filing of GSTR-3B.

This tolerance is temporary.

How to View the ITC Reclaim Ledger

Path:
Dashboard → Services → Ledger → Electronic Credit Reversal and Re-claimed

RCM Liability / ITC Statement (RCM Ledger)

Purpose and Introduction

To track Reverse Charge compliance and prevent excess RCM ITC claims, GSTN introduced the RCM Liability/ITC Statement:

• From August 2024 onwards for monthly filers
• From July–September 2024 quarter for quarterly filers

The ledger tracks:

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

Taxpayers were also allowed to declare and amend opening balances for historical RCM transactions.

Current Warning Mechanism

If ITC claimed under RCM in Table 4(A)(2)/(3) exceeds:

• Closing balance of the RCM ledger plus
• RCM liability declared in Table 3.1(d) of the same return

→ A warning message is displayed, but filing is currently permitted.

How to View the RCM Ledger

Path:
Dashboard → Services → Ledger → RCM Liability/ITC Statement

Upcoming Hard Validations in GSTR-3B

GSTN has now confirmed that negative balances and excess ITC availment will soon be blocked at the filing stage.

Validation Rules to be Implemented

(a) ITC Reclaim Ledger Validation

Reclaimed ITC in Table 4(D)(1) must be:

≤ Closing balance of ITC Reclaim Ledger + ITC reversed in Table 4(B)(2) of current GSTR-3B

(b) RCM ITC Validation

RCM ITC claimed in Table 4(A)(2) and 4(A)(3) must be:

≤ RCM liability paid in Table 3.1(d) of current GSTR-3B + closing balance of RCM Ledger

If these conditions are violated, GSTR-3B filing will not be allowed.

Treatment of Negative Closing Balances

Negative ITC Reclaim Ledger

If the ITC reclaim ledger shows a negative closing balance, it means excess ITC was reclaimed earlier.

To file GSTR-3B, the taxpayer must:

• Reverse the excess ITC in Table 4(B)(2) of the current period
• If no ITC is available, the reversal amount will be added to tax liability

Example:
Closing balance: –₹10,000

→ Reverse ₹10,000 in Table 4(B)(2)

Negative RCM Ledger

A negative RCM ledger indicates excess RCM ITC claimed earlier.

To regularise:

• Option 1: Pay additional RCM liability in Table 3.1(d)
• Option 2: Reduce ITC claimed in Table 4(A)(2)/(3) to the extent of negative balance

Example:
Closing balance: –₹5,000

• Pay ₹5,000 RCM liability

OR

• Reduce ₹5,000 from RCM ITC claim

Only after correction will filing be permitted.

Conclusion

GSTN’s move from warning-based checks to ledger-locked validations fundamentally changes ITC compliance under GST.

Key takeaways:

• Excess ITC reclaim or RCM ITC will block GSTR-3B filing
• Negative balances must be corrected before filing
• Historic errors can no longer be carried forward silently
• Reconciliation of ITC ledgers is now non-negotiable

Taxpayers who have not aligned their internal workings with GST portal ledgers risk return filing failures and forced liability additions.

FAQs

1. How can I view my Electronic Credit Reversal and Re-claimed Statement?

Dashboard → Services → Ledger → Electronic Credit Reversal and Re-claimed

2. How can I view my RCM Liability/ITC Statement?

Dashboard → Services → Ledger → RCM Liability/ITC Statement

3. What will change in GSTR-3B for ITC reclaim?

GSTR-3B filing will be blocked if ITC reclaimed in Table 4(D)(1) exceeds available ledger balance plus current reversals.

4. What if my ITC reclaim ledger is already negative?

You must reverse the excess ITC in Table 4(B)(2). If ITC is insufficient, the amount becomes payable liability.

5. How will RCM ITC validation work?

RCM ITC claimed cannot exceed RCM liability paid plus ledger balance. Excess will block filing.

6. What if my RCM ledger is negative?

Either pay additional RCM liability or reduce ITC claim to regularise before filing.

Notification Reference:  GSTN
29 /12 /2025