The Goods and Service Tax Network (GSTN) has issued the clarification that has emerged regarding the reporting of Input Tax Credit (ITC) in the annual GST return, addressing confusion over how to disclose ITC pertaining to FY 2023-24 but reversed in FY 2024-25. It has been clarified that such reversals are not required to be disclosed anywhere in GSTR-9 for FY 2024-25.
The confusion primarily arose because several taxpayers had availed ITC related to FY 2023-24 belatedly during FY 2024-25 and subsequently reversed it due to ineligibility, reconciliation discrepancies or documentary deficiencies. This led to uncertainty over whether the reversal should be reduced from the ITC reported in Table 6A1, disclosed under Table 7, or excluded entirely from the annual return of FY 2024-25.
It has now been clarified that Table 6A1 of GSTR-9 captures only the ITC pertaining to FY 2024-25, irrespective of the period of availment. Similarly, Table 7 is meant only for reversals relating to the ITC of the current year, that is, FY 2024-25. Consequently, if ITC belonging to FY 2023-24 is reversed in FY 2024-25, such reversal does not fall within the reporting parameters of the annual return for FY 2024-25.
This clarification ensures that taxpayers do not duplicate reporting or create inconsistencies between GSTR-9 and the monthly GSTR-3B filings. It also aligns with the principle that the annual return is intended to summarise the credits of the financial year to which it pertains, rather than adjustments concerning past periods.
Tax professionals advise maintaining separate year-wise ITC ledgers to avoid overlap between prior year credits claimed in the current year, current year reversals and audit-based adjustments. Such segregation will assist in accurate reconciliation between GSTR-3B, GSTR-9 and GSTR-2B, particularly in the backdrop of increased scrutiny of ITC claims.
With annual return compliance timelines approaching, the clarification provides much-needed certainty for taxpayers handling past-year credit reversals in the current financial cycle.
