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The electronic credit ledger balance on the GST portal is lower than the input GST balance in the books, and the finance executive cannot say which is right.
Books often record GST on every purchase; the ledger records only credit claimed in GSTR-3B, less credit used against output tax and reversals. Blocked credit and unclaimed credit sit only in the books.
A bridge from the books balance to the ledger balance with lines for set-off used, reversals, credit not yet claimed, blocked credit and opening differences, done separately for IGST, CGST and SGST.
The books balance and ledger balance agree after bridging items, and set-off and reversal entries are posted so next month starts clean.
The credit ledger on the GST portal shows the input tax credit (ITC) you have claimed, minus what you have used to pay tax and what you have reversed. Your books often show GST on every purchase as posted. So the two balances differ until you bridge them, and the portal is usually lower because it has already taken out the credit you used.
What does each balance actually measure?
The electronic credit ledger is kept by the portal under Section 49(2) of the CGST Act, 2017. Credit enters when you claim it in GSTR-3B Table 4. Credit leaves when you use it to pay output tax, or when you reverse it, for example under Rule 37, Rule 42 or Rule 43.
Your input GST account in Tally or Zoho Books grows every time you post a purchase invoice. Unless your accountant also passes a set-off entry each month, the books never show the credit being used.
What are the likely causes?
| Cause | Effect on gap | Entry that fixes it |
|---|---|---|
| ITC already used to pay output tax | Portal lower | Set-off entry: debit output GST, credit input GST |
| ITC reversed (Rule 37, 42, 43) | Portal lower | Reversal entry to expense or supplier |
| ITC not yet claimed (invoice not in GSTR-2B) | Portal lower | None; move to an ITC pending account |
| Blocked credit under Section 17(5) booked as input | Portal lower | Move to expense or asset cost |
| Opening balance difference from an earlier year | Either way | One-time adjustment after review |
How do I bridge the portal balance to the books balance?
Do it head by head, because IGST, CGST and SGST are separate in the ledger.
- Write down the books balance for the head.
- Subtract credit used for set-off in returns filed so far.
- Subtract reversals reported in GSTR-3B.
- Subtract credit not yet claimed, and blocked credit sitting in the account.
- Compare the result with the portal ledger for the same date.
- Anything left is an unexplained difference to investigate.
Use the ledger date carefully. The portal changes only when a return is filed, so compare the books at the end of the last filed month.
Which side do I correct when they differ?
The portal ledger is the record that counts for tax. In most cases you correct the books by posting the missing set-off and reversal entries. The exception is when the bridge shows eligible credit that was in GSTR-2B but you forgot to claim it. You can still claim it in a later GSTR-3B, as long as you do so by 30 November after the end of the financial year, the Section 16(4) limit.
Worked example
At the end of September, the books show input GST of ₹4,20,000. The credit ledger shows ₹3,10,000. The gap is ₹1,10,000.
| Line | Amount |
|---|---|
| Books input GST balance | ₹4,20,000 |
| Less: credit used to pay output tax in GSTR-3B | ₹80,000 |
| Less: credit on invoices not yet in GSTR-2B, not claimed | ₹30,000 |
| Equals credit ledger balance | ₹3,10,000 |
Check: ₹80,000 + ₹30,000 = ₹1,10,000, and ₹4,20,000 minus ₹1,10,000 = ₹3,10,000. The accountant posts an ₹80,000 set-off entry and moves the ₹30,000 to an ITC pending account. The books now show ₹3,10,000 available and ₹30,000 pending, which tells the true story.
What to read next
- Next in this series: Why can’t I use my SGST credit to pay CGST?
- Reversal rules in detail: ITC reversal under Rule 42 and Rule 43
- When the balance keeps growing: refund of excess balance in the credit ledger
- Matching at volume: GST reconciliation software
Inward GST matching (GSTR-2A, GSTR-2B, ITC and IMS) is on the TransactIG roadmap.
Content authored by practitioners with experience at Amazon India, Intuit QuickBooks, and the Tata Group. Meet the team →