Solution for mismatch in GSTR 1 and GSTR 3B

Last updated on April 14th, 2021 at 05:09 pm

Solution for mismatch in GSTR 1 and GSTR 3B

Taxpayers are confused as to what should be taken as the primary source (GSTR 1/GSTR 3B/ Books of Accounts) for filing the Annual Return & Reconciliation Statement. Every expert has a different view about the primary source to be used and each one has supporting justifications too to prove. So in order to clear the ambiguity, Government has issued a clarification as to what should be taken as the base/primary source for Annual return and Reconciliation statement.

It is interesting to note that the Government clearly mentions that “Ideally, the information in Form GSTR-1, Form GSTR-3B, and books of accounts should be synchronous and the values should match across different forms and the books of accounts.”.

Though they accept the fact that both the forms (i.e GSTR 1 and GSTR 3B) serve different purposes. But still, the fact does not change as both the returns are filed using the details from books of accounts from the same business enterprise.  

What can be the reason for mismatch in GSTR 1 and GSTR 3B?

There can be broadly two reasons for mismatch in GSTR 1 and GSTR 3B :

• Total of outward supply was more as per GSTR 1 as compared to  GSTR 3B
• Total of outward supply was more as per GSTR 3B as compared to  GSTR 1

If the initial return filing system of GSTR 1, 2 and 3 would have continued, the situation of this mismatch would have not arisen.  As they both are not completely synchronized and linked the tax liability as per GSTR 1 and GSTR 3B is different. Taxpayers who intend to do fraud have been using this loophole for a while and evading tax until they are caught by the GST department.

What is the solution for the mismatch in GSTR 1 and GSTR 3B?

• If the scenario is >> Total of outward supply was more as per GSTR 1 as compared to  GSTR 3B.

⊗ This would have resulted in less tax payment.

⊗ All the information relating to the transaction is to be declared in Annual Return.

⊗ The payment for additional tax liability should be done along with interest in Form GST DRC-03.

• If the scenario is >> Total of outward supply was more as per GSTR 3B as compared to  GSTR 1.

⊗ This would have resulted in excess tax payment.

⊗ All the information relating to the transaction is to be declared in Annual Return.

⊗ If this results in a refund(eligible) then the same must be applied in FORM GST RFD-01A.

Note: Taxpayer cannot avail any input tax credit by filing an annual return. But if the taxpayer is of the opinion,  that an input tax credit is wrongly availed that can be reversed through FORM GST DRC-03. 

Purpose of following returns

Form GSTR 1

• GSTR 1 is a return for details of outwards supplies (i.e. sales).
• It is to be filed by the registered regular taxpayer.
• It is to be filed monthly by the large taxpayers and quarterly by the small taxpayers.

Form GSTR 3B

• GSTR 3B is a statement where the summary of all transactions is declared along with the payment of taxes due.
• It is to be filed by the registered regular taxpayer.
• It is to be filed monthly by the large taxpayers as well as the small taxpayers.

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CA Ankita Khetan

Founder at Financepost.in

Chartered Accountant in practice, DipIFRS (from ACCA, UK), Post Graduate in Commerce, Certified Independent Director (from IICA), and holds a certification in Forex and Treasury Management course (by ICAI).

She can be contacted at info.financepost@gmail.com

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