00:00If you've ever filed a GSTR 3B, you definitely know that feeling, right?
00:05That little bit of uncertainty when you ask yourself, where do things get messy?
00:09Where are those tricky, costly mistakes hiding out?
00:12Well, 9 times out of 10, the answer is right here, hiding in plain sight, in the details of Table 4.
00:19This is where you calculate your eligible input tax credit.
00:22And believe me, it's where a tiny misunderstanding can lead to big problems.
00:26Penalties, notices, or even worse, you lose out on credits you're entitled to.
00:31So, that's what we're going to do today.
00:33We are going to totally demystify this thing.
00:35We're taking a deep dive into Table 4 of the GSTR 3B, and we're going to break it down piece by piece so you can get it right every single time.
00:44So, here's our game plan.
00:46First, we'll crack the core equation that drives the whole thing.
00:49Then, we'll walk through exactly how to claim all your available credits in Part A.
00:54After that, we'll tackle the really tricky part, reversals in Part B.
00:58Then, we'll put it all together for the final calculation and wrap it up with some key rules you just can't afford to forget.
01:05Alright, first things first.
01:06The best way to get your head around Table 4 is to forget it's a tax form for a minute.
01:11Seriously, just think of it like a simple bank ledger for all your tax credits.
01:15It really is this straightforward.
01:17Part A, that's your deposit slip.
01:19It's where you list all the credits coming in.
01:21Part B, think of this as your withdrawal slip.
01:24This is for any credits you've got to give back.
01:26And Part C, that's your final balance.
01:28That's the net credit that actually lands in your account for the month.
01:32Simple as that.
01:33Okay, so let's start with the fun part, the deposits.
01:37Part A is where you account for all the different kinds of input tax credit you can claim.
01:41Let's break them down one by one.
01:43First up, we've got 4A1.
01:46This is for the integrated GST, you know, IGST, that you pay when you import goods into India.
01:53So, let's say you brought in some machinery and paid 50,000 rupees in IGST.
01:58Boom.
01:58You declare that full amount right here.
02:00Next on the list is 4A2, and this is for services you import.
02:06Here, you're claiming credit for tax you paid under the reverse charge mechanism, or RCM.
02:11A classic example, that's subscription to a foreign software service.
02:15If you paid 18,000 in IGST on that under RCM, this is where it goes.
02:21Moving on to 4A3.
02:22This is also for reverse charge, but this time, it's for supplies happening inside India.
02:27You'll see this with things like services from a goods transport agency, or GTA, or maybe fees you paid to your lawyer.
02:34If you paid 5,000 rupees in GST on a GTA service, you declare that credit right here.
02:39Now, what happens if your head office handles some of the bills and then passes the credit on to you?
02:44Well, that's what 4A4 is all about.
02:46If your head office is an input service distributor, or ISD, and it passes on 12,000 rupees in credit, you report that right in this section.
02:54And finally, we get to the big one, the main event, 4A5, all other ITC.
03:01For 99% of businesses, this is where most of the action is.
03:04It's your catch-all for all those normal, everyday business purchases.
03:08Raw materials, rent, professional fees, the whole shebang.
03:11A lot of this data is pulled in automatically from your GSTR 2B, which is handy.
03:15Okay, deposits are in.
03:16Now it's time to talk about the withdrawals.
03:18This is part B, and it's where we have to account for any input tax credit that we need to reverse or, you know, give back.
03:25Now listen up, because this is super important.
03:28Not all reversals are created equal.
03:31You've got permanent reversals, where that credit is gone, poof, forever.
03:35And then you have temporary ones, which means you can actually get that credit back later.
03:39Getting this right is probably one of the biggest keys to nailing table 4.
03:42So let's talk about those permanent reversals.
03:45These go into 4B1.
03:47This covers stuff that's legally blocked under Section 17.5, like the GST you paid on food for your staff.
03:52It also includes reversals you have to make for exempt supplies.
03:56In our example, that's $3,600 for the food and a cool $10,000 for exempt supplies.
04:01And remember, both of these are gone for good.
04:03Okay, what about temporary reversals?
04:06These get reported in 4B2.
04:07The classic textbook case here is when you don't pay one of your suppliers within 180 days.
04:12You've got to reverse that $12,000 in ITC you claimed earlier.
04:16But, and this is the key part, once you finally make that payment, you can claim that credit right back.
04:20It's not lost.
04:21It's just on hold.
04:22All right, we've made our deposits in Part A.
04:25We've handled our withdrawals in Part B.
04:28Now it's time for the moment of truth.
04:30Let's put it all together and figure out our final balance, the net ITC.
04:34First up, let's add up all those deposits from Part A.
04:39When we tally up everything, the imports, the RCM, the credit from our head office, and all our other purchases,
04:45our total available credit comes to a solid 175,000 rupees.
04:50Next, we have to subtract our total reversals from Part B.
04:54So that's our 13,600 in permanent reversals plus that 12,000 in temporary ones,
04:59giving us a grand total withdrawal of 25,600 rupees.
05:02And that leaves us with our final number, 149,400 rupees.
05:09This is your net ITC.
05:11This is the real deal, the actual amount of credit that's going to hit your electronic credit ledger for the month.
05:16Nice.
05:17Oh, and a quick word on Part D.
05:19Don't forget about it.
05:20It's basically for housekeeping.
05:2241 is where you'll report that you're reclaiming that temporary reversal of 12,000 rupees down the line.
05:28And 42, that's where you list any credits that you knew were ineligible right from the get-go,
05:33so you didn't even bother claiming them in Part A.
05:36Okay, before we wrap this up, let's just run through a few golden rules.
05:40Think of this as your final checklist before you hit that big file button.
05:43So here's the most important thing to burn into your brain.
05:46Even though a lot of Table 4 gets filled in automatically from your GSTR-2B, the buck stops with you.
05:52You are responsible for checking if every single credit is eligible.
05:56Just think of it like this.
05:57GSTR-2B is a suggestion box, but Table 4 is your final sworn statement.
06:03Also, make sure you're not claiming credit that's too old or has a place of supply mismatch.
06:07Those should be reported in 4D, too.
06:09You know, this quote right here just nails it.
06:13Your GSTR-2B shows you this big, beautiful universe of potential tax credit you could have.
06:18But it's what you do in Table 4 that decides how much of that credit you can actually keep.
06:22So the real question is, are you just accepting the defaults,
06:25or are you making sure you get every single rupee you're owed?
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