GSTR3B Correction

Author: Sneha Reddy

There’s lot of buzz around the topic on GSTR3B correction, which is a provisional and summarized return put forward by our government to collect taxes under the new GST regime which is a combo of all jumbo packed erstwhile indirect taxes which a seller, trader, manufacturer, retailer were paying to the government’s (Centre and State) where jurisdiction of taxes was divided among the center and State depending on the type of taxes. For Ex : Service tax was the levy of Centre where VAT belonged to Respective State governments etc., but under the new regime Goods and Service Tax (GST) there are no classifications as to Goods or Services neither the administration on taxes is based on this classification instead GST smartly classifies the whole indirect taxation system as Goods and Services ( meaning the definition is now broader and it covers services as well) then what about the administration? Who keeps the taxes center or state? in GST there’s slab system which has five major tiers (0%,5%,12%, 18% and 28%) and the administration rights now vests with the government Where the product is consumed. Meaning the manufacturing state doesn’t get the tax amount? to keep instead the state where these products are consumed gets the taxes and this is the base to determine the place of supply in GST. It’s only then decided whether the supply attracts CGST, SGST, IGST or UGST. Recalling this now let’s move forward and know whether its really possible to change details in GSTR3B and how will the GSTN match GSTR3B with GSTR3. To get a clarity government released a notification in this regard to answering the questions of the tax payers. Let us try to understand these in simple terms by bisecting the whole circular into small segments and leveraging it with the answers we seek.

GSTN NETWORK - SYSTEM BASED RECONCILIATION OF INFORMATION FURNISHED IN FORM GSTR-1 AND FORM GSTR-2 WITH FORM GSTR-3B :

CIRCULAR NO.7/7/2017-GST, DATED 1-9-2017 :

Our government requires each registered person to furnish details of outward supplies made in a month in FORM GSTR- 1 and information containing details of inward supplies received in a month in FORM GSTR-2 and a return in FORM GSTR-3 by the 10th, 15th and 20th of the next month respectively. Keeping in view that taxpayers may face certain issues in the initial days after the introduction of GST, the GST Council extended the date for filing of FORM GSTR-1 and FORM GSTR-2 for the months of July and August, 2017 and approved the filing of a simplified return in FORM GSTR-3B for these two months by the notified due dates after making the due payment of tax.

Registered persons opting to utilize transitional credit available (persons who wanted to avail a credit on stocks lying at godowns which suffered tax before GST enrollment or Credits available to be carried forward from the returns filed under erstwhile indirect tax laws) when read with the rules made thereunder for discharging the tax liability for the month of July, 2017 were required to file FORM GST TRAN -1 on or before 28th August, 2017. The resulting transitional credit was to be credited to the electronic credit ledger and be available for discharging the tax liability.

As per the provisions, the return in FORM GSTR-3B was required to be furnished when the due dates for filing of FORM GSTR-1 and FORM GSTR-2 have been extended. After the return in FORM GSTR-3B has been furnished, the process of reconciliation between the information furnished in FORM GSTR-3B with that furnished in FORM GSTR-1 and FORM GSTR-2 would be carried out in accordance with the provisions of the act. The procedure for reconciliation of information furnished in FORM GSTR-3 and FORM GSTR-3B is detailed in succeeding paras.

Filing of information in FORM GSTR- 1 & FORM GSTR-2 :

It could be seen that after the registered person has filed his return in FORM GSTR- 3B and the statement of outward supplies in FORM GSTR-1, the inward supplies shall be auto drafted for all registered persons (corresponding recipients of supply) and made available to them in FORM GSTR-2A. GSTR-2A FORM is the exact replica of FORM GSTR-2 containing only those details that are auto-populated from the details furnished in FORM GSTR-1 by the corresponding suppliers. Based on the details auto populated in FORM GSTR-2A, the registered person shall prepare the statement of inward supplies in FORM GSTR-2 by:—

  • adding, deleting or modifying the invoice level details communicated in FORM GSTR-2A;

  • supplementing information pertaining to details that are required to be furnished in GSTR-2 but are not part of FORM GSTR-2A like details of imports, details of supplies attracting reverse charge that have been received by registered person;

  • providing details of supplies received from composition suppliers and exempt, nil-rated & non GST inward supplies;

  • providing details of advances paid on inward supplies attracting reverse charge, if any, along with adjustments;

  • providing details of reversal of ITC as per the provisions of rules 37, 39, 42 and 43 of the Rules, if any; and

  • feeding HSN wise summary details of inward supplies.

How to Correct the GSTR3B : (The erroneous details furnished by us)

In case the registered person intends to amend any details furnished in FORM GSTR- 3B, it may be done in the FORM GSTR-1 or FORM GSTR-2, as the case may be. For example, while preparing and furnishing the details in FORM GSTR-1, if the outward supplies have been under reported or excess reported in FORM GSTR-3B, the same may be correctly reported in the FORM GSTR-1. Likewise, if the details of inward supplies or the eligible ITC have been reported less or more than what they should have been, the same may be reported correctly in the FORM GSTR-2. This information will get reflected in the revised output tax liability or eligible ITC, as the case may be, of the registered person. The information furnished in FORM GSTR-1 and FORM GSTR-2 will be auto-populated and reflected in the return in FORM GSTR-3 for that particular month.

Action on the system-based reconciliation

Once you finish up filing the statement of inward supplies in FORM GSTR-2 by the extended date, the common portal shall auto-draft Part-A of the return in FORM GSTR-3 for the said month based on the information furnished in FORM GSTR-1 and FORM GSTR-2. Depending on the revised figures of output tax liability and eligible input tax credit, Table 12 of Part B of FORM GSTR-3 shall be made available. The common portal would populate the correct figures of tax payable in column (2) of Table 12 of FORM GSTR- 3, based on the information furnished in FORM GSTR-1 and FORM GSTR-2. Remittance of taxes through the electronic cash ledger and electronic credit ledger in the return in FORM GSTR- 3B shall be displayed by the system in columns (3) to (7) of Table 12 of Part B of FORM GSTR-3. Where there is no difference between the details of output tax liability and eligible input tax credit furnished in FORM GSTR-3B and the details furnished in FORM GSTR-1 and FORM GSTR-2, the amount of tax payable and tax paid shall be the same in FORM GSTR-3B and FORM GSTR-3. The Registered person can sign and submit FORM GSTR-3 without any additional payment of tax.

[Note: The FORM for GSTR 3 has not yet been notified by GSTN Network. But hopes are that it would be available soon for the Users to interact with]

Additional payment of taxes

Instances where the tax payable by a registered person as per FORM GSTR-3 is more than what has been paid as per FORM GSTR-3B, the common portal would show another instance of Table 12 for making the additional payment of taxes, in accordance with the Act. When the tax payable in column (2) of Table 12 of FORM GSTR-3 is more than what was shown in FORM GSTR-3B, the additional amount of tax payable can be paid by debiting the electronic cash or credit ledger as per the provisions contained in the Act along with applicable interest on delayed payment of tax starting from 26th day of August, 2017 till the date of debit in the electronic cash or credit ledger. If the eligible ITC claimed by the person in FORM GSTR-2 is less than the ITC claimed and utilised by the registered person in FORM GSTR-3B, the same would be summed up to his output tax liability and shall have to be paid by him along with interest by debiting the electronic cash or credit ledger as per the provisions contained in the Act before submitting the return in FORM GSTR-3 to complete the process. But where the transitional credit as declared in FORM GST TRAN-1 is credited to the electronic credit ledger, the same can be utilised for the payment of the said additional tax liability.

Additional claim of eligible ITC

There may be situations where the eligible ITC claimed by the taxpayer in FORM GSTR-3B is less than the ITC eligible as per the details furnished in FORM GSTR-2, the additional amount of ITC shall be credited to the electronic credit ledger of the registered person when he submits the return in FORM GSTR-3. If there, any increase in the output tax liability, the registered person can utilize this additional amount of ITC eligible as per the details furnished in FORM GSTR-2 along with the balance in the electronic cash ledger, if required, for the payment of the increased output tax liability and submit his return in FORM GSTR-3.

Reduction in output tax liability

Where the output tax liability of the registered person as per the details furnished in FORM GSTR-1 and FORM GSTR-2 is less than the output tax liability as per the details furnished in the FORM GSTR-3B and the same is not offset by a corresponding reduction in the input tax credit to which he is entitled, the excess shall be brought forward to the next month's return to be offset against the output liability of the next month by the taxpayer when he signs and submits the return in FORM GSTR-3. However, simultaneously, if there is a decrease in the eligible input tax credit, the same will be adjusted against the above mentioned reduction in output tax liability and the balance, if any, of the reduction in output tax liability shall be carried forward to the next month's return to be offset against the output liability of the next month.

Submission of GSTR-3B without payment of taxes

If due to some reasons, the registered person has only submitted the return in FORM GSTR-3B and has not made the payment of taxes by debiting the same from his electronic cash or credit ledger, the return shall still be subjected to the reconciliation process as detailed above. The registered person should then furnish the details in FORM GSTR-1,FORM GSTR-2 and sign and submit the return in FORM GSTR-3 along with the payment of the due taxes as per the provisions of section 49 of the Act. But, since the payment was not made on or before the due date, the registered person shall be liable for payment of interest on delayed payment of tax starting from 26th day of August, 2017 till the date of debit in the electronic cash and/or credit ledger but will not be liable to pay any late fee provided the required return in FORM GSTR-3B was submitted on or before the due date.

Where the registered person has not submitted the return in FORM GSTR-3B, he is required to furnish the details in FORM GSTR-1 and FORM GSTR-2 and sign and submit the return in FORM GSTR-3 along with the payment of the due taxes as per the provisions of section 49 of the Act. But, since the payment was not made on or before the due date, the registered person shall be liable for payment of interest on delayed payment of tax starting from 26th day of August, 2017 till the date of debit in the electronic cash and/or credit ledger. However Late fee would not be levied for late filing of return in terms of section 47 of the Act, in accordance with the recommendation of the GST Council, as notified vide Notification No. 28/2017-Central tax, dated 1-9-2017.

Processing of information furnished

After submission of the information in FORM GSTR-1 and FORM GSTR-2, the process of matching GSTR 3B with GSTR3 shall be carried out as if these details were submitted in the regular course. Any amendment in the details furnished in FORM GSTR-1 and GSTR-2 shall be done following the procedure laid down under the Act respectively. The return shall be considered to be a valid return when the tax payable as per FORM GSTR-3 has been paid in full after which the return shall be taken up for matching. So this also means that change of details in GSTR3B is not allowed and corrections if any could b made only in GSTR1 and GSTR2 of the respective months.

Conclusion: The question of reconciliation of gstr-2 with books of account and how technology will play a vital role in the scenarios discussed by us clearly points one thing that this is the certain job for ERP software which is GST ready packaged. Because maintaining the details manually is certainly not possible because the data would be complex in structure considering the amount of data the entities would transact with and also the scope of GST is not just limited to purchase or sales alone we have supplies which attract Reverse charge. And the reconciliation of these bulk data with GSTR2 which is maintained electronically in GST network will not be easier task unless you have installed ERP systems in your business environment. And beside this, the concept of GST is a technology driven process as all your credits, liabilities are maintained electronically in your E- credit and E- liability wallet on GST portal. Reconciliation would be required on the concurrent basis to balance your wallets with correct values and also to reconcile the books of accounts maintained by us with the data available on GST network. And all these would be feasible only with the help of Software. And Tally. ERP9 (Release 6.1) is the best portfolio manager for all your GST related compliances. As it would maintain all the data related to your GST portfolio in electronic mode making the data available on real-time basis and these could be vouched and reconciled easily with the data maintained in GST network.

Definitely the role of technology here ranks higher because once we pass the entry in books of accounts say Tally books of accounts our one part of the job is completed but the other part of job would be dependent upon the data furnished by the counterparty because the GST structure is built in form of maze which only gets completed once you get all the pieces together. Considering these many possibilities we can come to a conclusion that without GST Software or ERP software there’s no GST possible. Unlike our previous taxation laws where we didn’t even require the need of Software for our businesses as all the data fed by us was one way traffic but it’s certainly different in GST where the data fed by your travels in a line and somewhere in the middle it’s vouched and matched with the data fed by the counterparty making it the job calling for ERP experts and Tally. ERP9 could be your one such expert for all such solutions.