Comparing GSTR-3B with GSTR-1 is a much-needed process to be undertaken by every taxpayer in order to ensure that there are no variations or gaps, which could, in turn, lead to a demand notice from the tax authorities or unwanted issues that may arise and hinder the accurate filing of the annual returns.

1.  GSTR-3B vs GSTR-1

GSTR – 3B is a monthly summary return filed by a taxpayer by the 20th of the next month. GSTR-3B discloses supplies made during the month along with GST to be paid, input tax credit claimed, purchases on which reverse charge is applicable, etc., and also makes a provision for the payment of taxes, if any, for the relevant month.

GSTR – 1 is a monthly or quarterly return filed by taxpayers to disclose details of their outward supplies for the month along with their tax liability. Here, invoice wise details are to be uploaded so that the Government can keep a check on every transaction. This forms the basis for the recipient of supplies to accept the same and take the eligible input tax credit.

2.  Importance for GSTR-3B vs GSTR-1

It is important to reconcile form GSTR–3B and Form GSTR–1 on account of the following reasons:

1. The total GST collections disclosed at the end of the year 2017-18 showed a mismatch of several thousand crores. GST authorities have issued show-cause notices to a large number of taxpayers asking them to reconcile the total of sales disclosed in the GSTR-3B summary return and the detailed GSTR-1 return.

2. Reconciliation would also help the Government to allocate the right share of tax revenue to the concerned states. This reconciliation is specifically useful to identify any errors that have been made when entering the details of integrated taxes while filing GSTR-3B.

3. GSTR-1 forms the base for the recipients of supplies to claim input tax credit while filing their returns. Hence, a timely and accurate declaration in both GSTR-1 and GSTR-3B is necessary to avoid hassles with recipients at a later date and also ensure that only genuine input tax credit can be claimed.

3. Reconciliation at the Time of Filing of Annual Return

At the time of filing an annual return in Form GSTR–9, a reconciliation of outward supplies is a must to ensure that the details disclosed match the details disclosed in GSTR-1 and GSTR-3B, across all months. Details of tax paid during the year need to be mentioned as well and this must tally with the total taxes disclosed and paid in GSTR-3B. Therefore, it is important that GSTR-1 and GSTR-3B match as the return-filing system is integrated and a mismatch between the same could result in improper disclosure in the annual return.

4. Reasons for Mismatches in GSTR-3B vs GSTR-1

The details disclosed in Form GSTR–3B and GSTR–1 may not reconcile on account of the following reasons:

1. Reporting of supplies under the wrong table in GSTR-3B, but correctly reporting the same when declaring it invoice-wise in GSTR-1. For example: Reporting zero-rated sales correctly in Table 6A of GSTR-1, but incorrectly reporting it under Table 3.1(a) in GSTR-3B.

2. Inter-state supplies made to unregistered persons omitted in GSTR-3B but declared in GSTR-1.

3. Value of supplies correctly shown but tax paid under the wrong head. For example, IGST instead of CGST & SGST or vice- versa.

4. Supplies that may have been amended after GSTR-1 has been filed. In other words, any change of tax liability between the time of filing GSTR-1 and GSTR-3B.

Due to the reasons mentioned above, the Government noticed a difference for the year 2017-18 running into tens of thousands of crores. This has resulted in notices being sent to taxpayers asking for an explanation for these differences.

5. Action to be Taken on Reconciliation of GSTR-3B vs GSTR-1

After considering the situations mentioned above, if any discrepancies are found in Form GSTR–1 and GSTR -3B across months leading to any shortage of tax paid by the supplier, the same must be paid along with interest. It is, therefore, necessary to conduct this reconciliation for every filing period to ensure that both the returns match, which wouldn’t give rise to any interest that may become payable at a later date.