Comparison and reconciliation between GSTR-3B and GSTR-1 are essential for businesses to ensure accurate tax reporting. GSTR-3B is a monthly summary return filed by taxpayers, providing a snapshot of their tax liability and input tax credit. On the other hand, GSTR-1 is a monthly return containing details of businesses' outward supplies. Reconciliation ensures consistency between these returns, helping to identify discrepancies and avoid potential tax-related issues.
Filing GST forms is crucial for businesses to operate legally and gather important information for the Income Tax Department. These forms play a significant role in ensuring compliance and facilitating smooth business operations. Taxpayers must file various GST returns at different intervals throughout the year. These returns serve as a means to provide the necessary information and fulfil legal obligations under the GST regime.
Did you know? The concept of implementing a nationwide Goods and Services Tax in India was initially proposed by the Kelkar Task Force in 2003, led by economist Vijay Kelkar.
GSTR-3B vs GSTR-1
GSTR-3B is a monthly summary return where taxpayers provide information about supplies, GST liability, input tax credit claimed, reverse charge purchases, and more. It is filed by the 20th of the following month (or 22nd/24th for quarterly filers) and allows for tax payment for the relevant month. On the other hand, GSTR-1 is a monthly or quarterly return that taxpayers use to disclose outward supplies and tax liability. It requires uploading invoice-wise details to provide a comprehensive transactional view. GSTR-1 is essential for recipients to accept supplies and claim eligible input tax credits. GSTR-3B and GSTR-1 play significant roles in the GST compliance process, facilitating accurate reporting and compliance with tax obligations.
Importance for GSTR-3B vs GSTR-1
Reconciling GSTR-3B and GSTR-1 is crucial due to the following reasons:
1. Avoiding Show Cause Notices: GST authorities have issued show cause notices to taxpayers, emphasising the need to reconcile the total sales declared in GSTR-3B with the detailed GSTR-1 return.
2. Ensuring Accuracy: Reconciliation ensures that invoices are neither omitted nor recorded multiple times in either return, leading to accurate calculation of output tax payable on sales.
3. GSTIN Suspension Risk: Since January 1, 2021, supplies declared in GSTR-1 must match the summary total in GSTR-3B. Failure to do so may result in GSTIN suspension.
4. Interest on Late Declaration: Late declaration of GST liability can attract interest, making timely reconciliation essential to avoid additional costs.
5. Correct Revenue Allocation: Reconciliation helps the government allocate the appropriate share of tax revenue to respective states. It also aids in identifying errors in integrated tax details entered in GSTR-3B.
6. Smooth Input Tax Credit Claims: GSTR-1 serves as the basis for recipients to claim input tax credits. Accurate and timely declaration in GSTR-1 and GSTR-3B prevents future complications with recipients and ensures genuine input tax credit claims. By prioritising the reconciliation process, businesses can minimise risks, maintain compliance, and facilitate smooth operations under the GST framework.
Reasons for Mismatches in GSTR-3B and GSTR-1
Form GSTR-3B and GSTR-1 may not reconcile due to the following reasons:
1. Incorrect reporting of supplies in GSTR-3B compared to GSTR-1, such as recording zero-rated sales in the wrong table.
2. Mismatches caused by issuing debit/credit notes after the initial invoice.
3. Omission of inter-state supplies to unregistered persons in GSTR-3B but declared in GSTR-1.
4. Incorrect allocation of tax paid, such as reporting IGST instead of CGST and SGST.
5. Amendments to supplies after filing GSTR-1 but before filing GSTR-3B.
6. Time differences in reporting invoices between GSTR-1 and GSTR-3B.
Awareness of these potential discrepancies helps businesses identify and rectify any inconsistencies between the two forms, ensuring accurate reporting and compliance with GST regulations.
Difference Between GSTR-1 and GSTR-3B
Let's explore the differences between GSTR-1 and GSTR-3B following different aspects:
1. Definition of GSTR-1 and GSTR-3B
These returns serve different purposes and have specific filing frequencies. Let's explore each of them in more detail:
GSTR-1 is a return filed by registered taxpayers to provide details of their outward supplies or turnover. It includes comprehensive information about all the supplies made by the business during a specific period. The turnover of the business determines the filing frequency of GSTR-1. Businesses with an annual turnover above ₹1.50 crore must file GSTR-1 every month, while those with a turnover below this threshold can file it quarterly. The GSTR-1 return captures various details such as the invoice-wise and consolidated values of supplies made to registered and unregistered persons, exports, supplies liable for the reverse charge, and exempted supplies. It also includes details of debit and credit notes, advances received, and adjustments made.
GSTR-3B is a self-assessment return filed by registered dealers to report their summary tax liabilities for a specific period. Unlike GSTR-1, GSTR-3B is filed monthly, irrespective of the business's turnover. It is designed to simplify the return filing process and ensure a smoother transition to the GST system. The GSTR-3B return captures summarised information related to purchases, input tax credits, sales, output tax liability, and tax payments made. It provides a consolidated view of the business's monthly tax position. This return includes details of inter-state and intra-state supplies, taxable value, and tax amounts (CGST, SGST, and IGST) payable by the taxpayer. It's important to note that GSTR-3B is a provisional return and allows businesses to report their tax liabilities and make payments. However, it does not replace the requirement to file GSTR-1, GSTR-2A (auto-drafted inward supplies), and GSTR-3 (final return). These additional returns are necessary to reconcile the input tax credit and ensure accurate reporting.
2. Filing Dates of GSTR-1 and GSTR-3B
GSTR-3B is filed monthly by all registered businesses, regardless of their turnover. The due date for filing GSTR-3B is consistently set as the 20th day of each month. This monthly return mandates businesses to provide a condensed summary of their tax liabilities and payments for the specific period.
The filing deadlines for GSTR-1 vary depending on the business turnover and characteristics. If a company's annual revenue surpasses ₹1.50 crore in the preceding or current year, GSTR-1 must be filed monthly. The due date for submitting GSTR-1 for the current month is the 11th day of the subsequent month. However, if the turnover falls below ₹1.50 crore, businesses can file GSTR-1 quarterly. In such instances, the due date for filing GSTR-1 would be either the 30th or 31st day of the month following the last quarter. Businesses must remain informed about these filing dates and ensure compliance with the prescribed deadlines to avoid penalties or fines. Adhering to the designated timelines for filing GSTR-1 and GSTR-3B not only upholds proper GST compliance but also guarantees the accurate reporting of financial transactions to the tax authorities.
3. Tax Payment of GSTR-1 and GSTR-3B
In India, GSTR-3B is a monthly summary return for the GST. Businesses must briefly explain their monthly sales, purchases, input tax credit, and tax payments. GSTR-3B filing deadlines for all registered taxpayers are the 20th of each month.
GSTR-1 is a thorough return that records a company's sales (outward supplies). It details the volume, cost, and tax obligation of the goods and services sold. The filing frequency is determined by turnover: quarterly for turnover under 1.50 crore and monthly for turnover over 1.50 crore. The earliest filing deadline is for monthly filers on the eleventh day of the following month. Regarding tax payments, there is an interesting distinction between GSTR-1 and GSTR-3B. When filing a GSTR-1 return, no tax payment is required at that time. However, for GSTR-3B, settling the tax liability before filing the return is essential. This means businesses must ensure they have paid their taxes in full before submitting their GSTR-3B return.
It's important to note that any delay in filing the return can result in penalties. Therefore, businesses must prioritise timely filing to avoid penalties and associated consequences. Keeping up with the tax payment requirements and adhering to the specified timelines for filing GSTR-3B is crucial for maintaining compliance and avoiding financial penalties or complications.
4. Penalty for Delay in Filing or Not Filing GSTR-1 and GSTR-3B
In case of late filing, the penalties for GSTR-1 and GSTR-3B differ. If a company files GSTR-1 after the due date, a penalty of ₹200 per day (₹100 each for SGST & CGST) must be paid. This penalty is applicable for each day of delay until the return is filed. For GSTR-3B, if the return is filed after the due date, the penalties vary based on the circumstances. For a nil return (no transaction details added), a penalty of ₹20 per day will be charged. However, if there are any added transaction details, a penalty of ₹50 per day will be levied. Similar to GSTR-1, these penalties are applicable for each day of delay until the return is filed. Businesses must file their GSTR-1 and GSTR-3B returns within the prescribed timelines to avoid these penalties. Timely compliance with the filing requirements helps businesses maintain good standing with the tax authorities and avoid unnecessary financial burdens.
By being well-informed about these aspects, taxpayers can ensure that they submit their returns accurately, without any omissions or mistakes. This is crucial as any discrepancies or errors in the returns may lead to receiving a notice from the tax authorities or facing other complications. It is essential to prevent any inappropriate filing of returns, which can result in unnecessary hassles and potential legal consequences. It is recommended to refer to reliable sources to acquire the latest information and stay informed about any updates or changes in the filing process.
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