This circular provides detailed guidance to ensure correct and uniform reporting of inter-State supplies and proper disclosure and reversal of ineligible or blocked input tax credit (ITC) in FORM GSTR-3B and FORM GSTR-1.

It clarifies that inter-State supplies made to unregistered persons, composition taxpayers, and UIN holders must be reported place-of-supply wise in Table 3.2 of FORM GSTR-3B, even though such supplies are already included in Table 3.1. Corresponding disclosures must also be made in the relevant tables of FORM GSTR-1. Taxpayers, especially those operating in sectors such as banking, insurance, telecom, e-commerce, and digital services, are advised to maintain correct customer State details to avoid incorrect declaration of place of supply and wrong settlement of tax between States.

The circular also provides a comprehensive explanation of reporting ITC in Table 4 of FORM GSTR-3B in the context of auto-population from FORM GSTR-2B. It clarifies that all ITC, including ineligible ITC, is auto-populated in Table 4(A), and taxpayers must identify and reverse ineligible or non-reclaimable ITC, such as blocked credit under section 17(5) and reversals under rules 38, 42, and 43, in Table 4(B)(1). Reversible ITC, such as that under rule 37 or section 16 conditions, must be reported in Table 4(B)(2) and can be reclaimed later when conditions are fulfilled. Only the net eligible ITC reflected in Table 4(C) will be credited to the electronic credit ledger.

These clarifications aim to ensure accurate return filing, correct fund settlement between Centre and States, and avoidance of incorrect availment or reporting of ITC.