Reconciliation of GSTR 1 and GSTR 3B Return Forms

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August 16, 2019

Reconciliation of GSTR 1 and GSTR 3B

Reconciling of GSTR 1 and GSTR 3B holds incredible value as any mismatch between the two can exclude you from the good books of government and may comply the tax authorities to send you to demand notice in order to solve the unwanted issues that may obstruct the errorless filing of the annual returns. To understand the importance of reconcilement in this context, let us first know about these two forms.

GSTR-1 is a monthly or quarterly return filed by taxpayers wherein they mention the details of their outward supplies for the month – along with their tax liability. In GSTR-1 invoice-wise details are to be uploaded to facilitate Government to keep track on every transaction, this further becomes a cornerstone for the recipient of supplies for claiming the eligible input tax credit.

GSTR-3B is a monthly summary return filed by a taxpayer wherein they mention the supplies made during the month along with GST to be paid, input tax credit claimed, purchases on which reverse charge is applicable, etc. The taxpayer has to file this form by the 20th of the next month. This is also a provision for the payment of taxes, if any, for the relevant month.

GSTR-1 vs GSTR-3B

The GSTR-3B is an encapsulated return form whereas GSTR-1 is a reporting of all output invoices and taxes on them. GSTR 1 is an individual invoice level reporting which is done on GSTN while GSTR 3B is a summarised/consolidated reporting for sales and purchases in a month together with the ITC claims for the month.

Importance of Reconciliation between GSTR 1 and GSTR 3B

GST Reconciliation/ Matching is not a new term for any taxpayer. This has been a popular item since earlier VAT and excise regime. Under GST, Reconciling Form GSTR 1 and Form GSTR 3B  has gained more significance as it helps in the following way:

  • It’s a confirmation that there is no duplicity or oversight of invoices
  • It is helpful in ascertaining an accurate amount of tax which is payable on the sales during the particular period.
  • It is helpful in diagnosing errors in integrated taxes while filing GSTR 3B
  • It assists the Government to designate the right share of tax revenue to the concerned states.
  • It ensures that only legitimate input tax credit can be claimed as GSTR-1 forms are the linchpin or foundation for the recipients of supplies to claim input tax credit while filing their returns and reconcilement of  GSTR-1 and GSTR-3B ensure that only genuine input tax credit can be claimed.

Reconciliation During the filing of Annual Return

While filing an Annual return in Form GSTR-9, a reconciliation of outward supplies is much needed to make sure that the details presented match the details mentioned in GSTR-1 and GSTR-3B, across all months. Similarly, Details of tax paid throughout the year also has to be mentioned which must also be matched with the total taxes mentioned and paid in GSTR-3B. Therefore Reconciliation While the filing of Annual return holds far fetched value.

Why Do Mismatches in GSTR-1 vs GSTR-3B Happen?

The following could be the reasons for mismatches in GSTR-1 vs GSTR-3B

  • Mentioning supplies in GSTR 3B under the wrong head but correctly declaring the same details in GSTR 1

For Instance:  Correctly Furnishing Zero-Rated Supplies under the Table 6A of GSTR 1, but wrongly reporting the details under Table 3.1(a) in GSTR 3B.

  • Issuing invoices, debit and credit note for a specific month on a later date.
  • Supplies made to an unregistered person declared in GSTR 1 but omitted in GSTR 3B.
  • Tax paid under the wrong head

For instance, IGST paid under the head of CGST and SGST.

  • Tax liability mutated between the filing time of GSTR 1 and GSTR 3B
  • Reporting invoices in GSTR 1 and GSTR 3B at different time.

Consequences of Mismatches

These mismatches may lead you to get show cause notices from GST authorities or lead you to pay a penalty plus interest. In case of a lesser amount of tax paid, the taxpayer has to pay the deficit tax amount together with interest.

How to Solve GSTR 1 and 3B Mismatch?

Considering such mismatches SAG Infotech concocted Gen GST Software –  Highly advanced reconciliation solution which ensures that there is no chance left for any mistake and mismatch by knocking out human intervention.

It compares the data of GSTR 1 and 3B data and identifies all the mismatch areas followed by its correction and validation at all the levels.

Gen GST along with reconciliation also takes care of purchases and GSTR 2A, E-way bills reconciliation with inward and outward supply. All the reconciliations are done monthly/ yearly consolidated and also in accordance with the vendor’s wish. Thus, making you and your business stay tension-free in terms of GST Compliance. Isn’t it amazing?

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