Introduction
Accurately reflecting your tax liability is crucial under the Goods and Services Tax (GST) regime in India. This newsletter addresses a common concern: discrepancies between the tax liability declared in GSTR-1 and GSTR-3B.
Understanding the Forms:
- GSTR-1: This form details all your outward supplies (sales) made during a month.
- GSTR-3B: This is a summarized return where you declare your tax liability (tax payable) for the month.
Reconciliation and Discrepancies
It's essential to ensure the tax liability calculated in GSTR-1 matches the one reflected in GSTR-3B. Discrepancies can arise due to various reasons, including:
1. Errors in data entry: Typos or mistakes while entering sales figures in either form.
2. Timing differences: Late reported supplies or adjustments made after filing GSTR-1.
3. Classification issues: Incorrect classification of supplies impacting tax rates.
4. Amendments in invoice: Supplies getting amended after the date of filing of the GSTR-1 return.
5. Negative Values: Including negative values for advance payments or credit notes in GSTR-1 might not be reflected in GSTR-3B.
New Rule 88C:
The Government introduced Rule 88C to address these discrepancies. If the tax payable in GSTR-1 exceeds the one declared in GSTR-3B by a specific threshold, the GST portal will automatically send an intimation to the taxpayer.
The new changes will facilitate taxpayers to pay/ explain the reason for the difference in liabilities without the intervention of the tax officers.
What to Do in Case of Discrepancy:
1. Reconcile your GSTR forms: Identify the reason for the mismatch.
2. Respond to intimation under Rule 88C: If applicable, explain the discrepancy or pay the additional tax within seven days.
3. Seek professional help: Consider consulting a tax professional for guidance.
Consequences of Ignoring Discrepancies:
- Interest on late payment: You may be liable to pay interest on the unpaid tax.
- Suspension of GST registration: In severe cases, your GST registration might be suspended.
- Recovery proceedings under section 79: the officer can initiate recovery proceedings under section 79
Conclusion:
Maintaining accurate records and reconciling GSTR-1 and GSTR-3B regularly helps avoid future complications. If you have any concerns, consult a tax advisor for assistance.
Disclaimer:
“The information contained herein is only for informational purpose and should not be considered for any particular instance or individual or entity. We have obtained information from publicly available sources, there can be no guarantee that such information is accurate as of the date it is received, or it will continue to be accurate in future. No one should act on such information without obtaining professional advice after thorough examination of particular situation.”
Prepared On:
17/10/23
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