Blocked, Reversed, Ineligible: Three Words, Three Meanings

Blocked explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.

In conversation these are used interchangeably. In GSTR-3B Table 4, GSTR-9 Table 7 and a show cause notice, they are not — and mixing them up produces a reconciliation that will not tie and a reply that does not answer the allegation.

Ineligible credit is credit the law never allowed — s.17(5) blocked items, and credit outside the s.16 conditions. It is not availed at all. Reversed credit is credit that was validly availed and then given back — under Rules 37, 37A, 42, 43 or s.18(4). Reversal may be permanent or reclaimable. Blocked has two distinct uses: s.17(5) blocked credit (a category of ineligibility), and a Rule 86A block on the electronic credit ledger (an enforcement action that does not affect eligibility at all).

The four categories

1. Ineligible under s.17(5). Motor vehicles, food and beverages, membership of a club, construction of immovable property, goods lost or given away, and the rest of the list. Never availed. Reported in GSTR-3B Table 4(D)(1) as ineligible credit under s.17(5).

2. Ineligible for another reason. Credit that fails a s.16(2) condition — no invoice, goods not received, supplier did not report — or is time-barred under s.16(4). Also never availed. Reported in Table 4(D)(2) as "others".

3. Reversed, permanently. Availed correctly, then given back and not recoverable — Rule 42 D1 and D2, Rule 43 Te, s.18(4) on entering composition, s.29(5) on cancellation. Reported in GSTR-3B Table 4(B)(1).

4. Reversed, reclaimable. Availed correctly, given back temporarily, recoverable later — Rule 37 (non-payment within 180 days), Rule 37A (supplier's non-filing), and reversals on account of IMS action. Reported in GSTR-3B Table 4(B)(2), and tracked in the portal's Electronic Credit Reversal and Re-claimed Statement.

Why Table 4(B)(1) versus 4(B)(2) matters

The split was introduced precisely because the two behave differently.

4(B)(1) — permanent. The credit is gone. It does not come back and should not be tracked for reclaim.

4(B)(2) — reclaimable. The portal maintains a running Electronic Credit Reversal and Re-claimed Statement from the opening balance reported by taxpayers, and any reclaim in Table 4(A)(5) with the corresponding disclosure in Table 4(D)(1) is validated against it.

Reporting a permanent reversal in 4(B)(2) inflates the reclaimable balance and generates a system warning when it is never reclaimed. Reporting a temporary reversal in 4(B)(1) forfeits the tracked balance and makes a later reclaim look unsupported.

Rule 86A blocking is none of these

A Rule 86A block is an enforcement measure on the ledger, not a determination about credit.

• The credit remains availed and remains in the ledger.
• It is not reported as reversed in Table 4(B).
• It cannot be utilised while the block subsists.
• It lapses after one year.
• It creates no liability — a demand requires a s.73, s.74 or s.74A notice.

So a business under a Rule 86A block has not reversed anything and should not be filing as if it had. Rule 86A: blocking the credit ledger →

Where each appears in GSTR-9

Note that Table 7E is specifically s.17(5) reversal — which is conceptually odd, since s.17(5) credit should never have been availed. In practice, businesses that availed and then reversed report it here; those that never availed it report it in Table 8F or leave it out of the availment figures altogether. Both approaches are seen; consistency across years matters more than the choice.

Getting the reply right

When a notice alleges "wrongly availed credit", identify which category it actually concerns:

• s.17(5) blocked — the defence is that the item falls within an exception or outside the clause.
• s.16(2) condition failure — the defence is documentary.
• s.16(4) time bar — check s.16(5) and s.16(6). Sections 16(5) and 16(6) →
• Rule 42/43 short reversal — the defence is the computation.
• Rule 37/37A — the defence is that payment was made, or the supplier filed.
• Interest — check whether the credit was utilised at all under Rule 88B(3). Interest on wrongly availed ITC →

A reply that addresses the wrong category concedes the right one.

Key takeaways

• Ineligible — never availed. Reversed — availed then given back. Blocked — either s.17(5) ineligibility or a Rule 86A ledger action.
• Table 4(B)(1) is permanent reversal; Table 4(B)(2) is reclaimable.
• The portal tracks reclaimable reversals in the Electronic Credit Reversal and Re-claimed Statement.
• A Rule 86A block is not a reversal and is not reported as one.
• GSTR-9 Table 7 captures reversals; Table 8E and 8F capture credit not availed.
• Identify the category before replying to a notice.

Read next

• Blocked ITC Under Section 17(5)
• Rule 86A: Blocking the Electronic Credit Ledger
• Rule 42 Worked: The Monthly Formula and Annual True-Up
• GSTR-9 Annual Return: Table-Wise Filing Guide

Disclaimer: Positions stated as on 5 September 2026, based on ICAI Background Material on GST, Volume I (2026 edition) and the ICAI Technical Guide on GST Annual Return (Form GSTR-9).