For businesses that operate under the aegis of the Goods and Services Tax (GST) across India, a profound knowledge of the different tax returns is paramount in maintaining compliance and evading penalties. Among the mandatory tax payments taxpayers must submit, GSTR-1 and GSTR-3b which occupy a place of eminence. Though both have a position of prominence among the GST filing modes, they indicate an enormous difference in frequency, provisions, and area of operation.
Besides being mandatory filings, they directly affect your business’s tax credits, cash flow, and overall financial health.
This post offers an in-depth comparison, highlighting the major distinction between GSTR 1 and GSTR 3b and the worth of reconciling the two. Ensure timely and accurate GST return filing with our experts who manage your GSTR-1 and GSTR-3B filings, enabling you to focus on expanding your business.
Overview of GSTR-1
GSTR-1 is a comprehensive tax return that a taxpayer must file in order to report the taxpayer’s outward supplies or sales for the reporting period. The return will report the total supplies of goods and services provided by the taxpayer, either to other taxpayers (B2B) or to the end consumer (B2C). Based on the taxpayer’s turnover, GSTR-1 is to be filed on either a monthly or quarterly basis. GSTR-1 contains comprehensive information about the taxpayer’s total sales and accounting notes, such as debit/credit notes, invoices and changes to previous supplies. The return only looks at outward supplies and provides a separate record of the revenue earned by the taxpayer’s business.
GSTR-3B Overview
GSTR-3B is a summary return that needs to be filed on a monthly basis and reports the taxpayer’s liability for that month of tax.
It is a streamlined return that offers a summary of purchases, sales, and input tax credit (ITC) asserted during the month. Unlike GSTR-1, which gives extensive transaction-level information, GSTR-3B provides a summary of the total tax liability and turnover of the taxpayer.
Who has to File a GSTR 1?
Every registered dealer, whether active or inactive regular, has to pay GSTR 1 returns if they registered regardless of the turnover or even if there are no transactions in a month that they have registered in this category. This is even true if no business occurs in a month or no sale occurs. There are always exceptions where persons or organizations do not have to fill out GSTR 1:
- Input Service Distributors: Input service distributors under GST principles, especially those who hold an invoice for invoice services taken by different locations.
- Composition Scheme Businesses: Businesses registered under the composition scheme according to GST regulations, pertaining to entities with a yearly turnover of nearly Rs. 1.5 crores beginning from April 1, 2019.
- Non-resident Taxable Person: Non-taxable individuals who import goods and services from outside India or supervise business activities for non-resident Indians.
To file GSTR 1, these are the requisites:
- You must have a valid Goods and Service Tax Identification Number (GSTIN)
- Digital signature certificate
- User ID and password for the GST portal and Aadhar number.
- Moreover, access to the mobile number enrolled with Aadhar is also required.
Who Requires to File a GSTR 3B
GSTR 3B should be filed by all taxpayers under the GST regime irrespective of the volume of monthly transactions be it large or small. However, certain categories of taxpayers do not have to file GSTR 3B. This includes:
- Composition dealers, Suppliers of access to a database, retrieval services or online information
- Input service distributors
- Non-resident, taxable Indians
The GSTR 3B form needs taxpayers to report all existing ITCs (Input Tax Credits), summarize their sales and purchases information, describe tax payables and enumerate the tax they have already paid.
Major Differences Between GSTR-1 and GSTR-3B
Following are the main differences between GSTR-1 and GSTR-3B:
1. Purpose
- GSTR-1: Utilized for recording outward supplies and ensuring that the particulars tally with the recipient’s records.
- GSTR-3B: Used for stating and paying monthly tax liabilities.
2. Who Should File GSTR-3B and GSTR-1
- All registered taxpayers who do outward supplies (sales) are needed to file GSTR-1.
- Regular taxpayers must submit GSTR-3B each month, irrespective of whether they have done any outward supplies in the tax period. Small taxpayers having a turnover of nearly Rs. 1.5 crores possess the option to submit GSTR-1 quarterly, while those with a turnover surpassing Rs. 1.5 crores are needed to file it monthly.
3. Due Date for Filing GSTR-1 and GSTR-3B
GSTR-1:
Monthly Filing: If a company’s yearly revenue surpasses Rs. 1.50 crore in the earlier or present financial year, GSTR-1 must be filed monthly. The due date for submitting GSTR-1 is the 11th day of the subsequent month.
Quarterly Filing: For taxpayers having a yearly turnover of under INR 1.50 crore, GSTR-1 can be submitted quarterly. The due date for filing, in this instance, is the 30th or 31st day of the month after the last quarter.
GSTR-3B:
GSTR-3B needs to be filed monthly by the 20th of the subsequent month. For instance, the GSTR-3B for August should be submitted by September 20. Nevertheless, small taxpayers with an accumulated turnover of up to Rs. 5 crores have the option to file GSTR-3B on a quarterly basis, and the tax liability will be auto-filled from GSTR-3B to GSTR-1 when filing the return.
4. Tax Payment of GSTR-1 and GSTR-3B
- A GSTR-1 return should be filed without paying tax as it is simply reporting the details of outward supplies.
- GSTR-3B, however, is required to pay the tax liability before filing it. Failure to file GSTR-3B will result in a penalty (or non-compliance) for the company for late submission.
5. Penalty for Failure to File GSTR-1 and GSTR-3B or Late Filing Relief
- GSTR-1: If a company files GSTR-1 after the due date, a penalty of INR 200 per day (INR 100 each for CGST and SGST) applies until it is filed.
- GSTR-3B: For a zero return, if GSTR-3B is submitted after the due date, a penalty of INR 20 every day will be levied.
- For returns with any extra transaction details, the penalty rises to INR 50 each day.
- These penalties continue to pile up until the return is submitted.
6. Details to be Contained in GSTR-1 and GSTR-3B Returns
GSTR-1:
- Invoice Details: Must contain information on business-to-business (B2B) and consumer-to-business (B2C) transactions.
- Exports: Detail on the export of services and goods.
- Exempt Supplies: Details of any exempt supplies.
- Overview of Supplies: A summary of all supplies done during the period. Account Repayment and Receivables: Details relating to any receivables outstanding at the end of the period and any repayments made during the period.
GSTR-3B:
- Exempt Supplies: Data on exempt supplies.
- Turnover: Contains the total turnover for the month.
- Tax details: Details taxable value and sums total for SGST, CGST, and IGST.
- Input Tax Credit (ITC): Total input tax credit present during the month.
- Inward Supply under Reverse Charge: Details of inward supplies where the opposite charge mechanism is used.
Reconciliation Between GSTR-1 and GSTR 3B
In situations where divergence occurs regarding returns between GSTR 1 and GSTR 3B covering different months, tax assesses can be liable to return fees or interest for lapses in returns to meet the tax balance. So, it is recommended that taxpayers reverify their filing period for GSTR 1 and GSTR 3B to marginalize the frequency of error.
Such a proactive approach helps in promoting proper annual return submission and also adapt itself with the united framework for all GST filings.
Bottom Line
Every taxpayer needs to know about the data and information they must include in Forms GSTR-3B and GSTR-1, along with their respective due dates and fines for late filings. With this detail, the business can ensure that there are no mistakes or gaps that could result in a demand notice from the tax authorities or various issues, and it can also evade the incorrect filing of returns.
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