GST

GSTR-3: Return Filing, Format, Eligibility and Rules

GSTR-3: Return Filing, Format, Eligibility and Rules

The advent of GST has digitized the returns filing procedure, which has made filing taxes easier than ever. This has made it convenient for taxpayers to calculate their tax liability, thereby limiting the possibility of making any errors and mistakes. Various forms have been formulated by the authorities to make the tax filing process even more seamless and straightforward for taxpayers. One such form is the GSTR-3 Form, which has been mandated to be filled by the taxpayers registered under the GST to show the amount of GST Liability of the taxpayer for the given month. In this article, we will take a look at what this form is, what the technicalities surrounding it, and whether it is still operative or not. In this article, we will delve into Form GSTR-3 and will try to understand what GSTR-3 is and what the technicalities surrounding it.

GSTR-3

First, come first, let us take a look at the purpose of GSTR-3. The taxpayers are required to file their returns with the help of the forms that have been mandated by the GST Regime. On a monthly basis, taxpayers are required to submit GSTR-3 to provide comprehensive information regarding their inter-state movement of goods, sales, purchases, and associated tax obligations for the given month. This form is mandatory for registered taxpayers who have not chosen to be governed by the composition scheme. It is also applicable to those taxpayers who do not have a UIN (Unique Identification Number). It is an auto-generated form that draws its data from the previously submitted GSTR-1 and GSTR-2 Forms.

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Importance of GSTR-3

GSTR-3 holds importance as it indicates to the taxpayer the amount of his GST Liability for a particular month or the taxable period, which must be paid. It represents the total amount derived from sales and purchase records as per the information provided under GSTR-1 and GSTR-2, respectively, serving as the foundation for tax calculations.

Who is required to file GSTR-3?

Every taxpayer who is registered under the GST is required to file GSTR-3, regardless of whether any transaction has taken place during that month or not.

Nevertheless, the following categories of registered individuals are exempted from filing GSTR-3:

  • Input Service Distributors (ISD)
  • Taxpayers registered under the Composition Scheme
  • Non-Resident Taxable Persons
  • Persons responsible for Tax Collection at Source (TCS)
  • Persons responsible for Tax Deduction at Source (TDS)
  • Suppliers of Online Information and Database Access or Retrieval Services (OIDAR), who are responsible for directly remitting taxes according to Section 14 of the IGST Act.

Prerequisites for filing GSTR-3

There are certain essential conditions that are required to be met before filing GSTR-3. There are as follows:

  • The taxpayer is required to be registered under GST and must have a PAN-based GSTIN
  • The taxpayer ought to have filed GSTR-1 and GSTR-2
  • The taxpayer ought to have paid the GST amount owed to the government
  • The taxpayer must have access to the registered contact number on which One Time Password (OTP) will be received, which will be required during the Electronic Verification Code (EVC) or Digital Signature Certificate (DSC).

The due date for filing GSTR-3

The due date for filing GSTR-3 for a particular month is the 20th of the following month.

Repercussions of not filing GSTR-3

Failure to submit Form GSTR-3 can lead to significant consequences. Failure to file GSTR-3 for a specific month will result in the inability to file GSTR-1 Form as well. This will subsequently expose the taxpayer to punitive penalties.

Penalty for Delay in Filing GSTR-3

In case of delayed filing of GSTR-3, the taxpayer is liable to incur interest charges as well as a late fee.

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The interest rate stands at 18% per annum, and it will be computed on the overall outstanding amount of tax and the interest will be accrued from the day after the filing due date until the payment date.

The late fee amounts to Rs. 100/day for CGST and Rs. 100/day for SGST, thereby making the total Rs. 200/day; however, the overall maximum late fee that can be levied is subject to Rs. 5000. It is noteworthy that there is no late fee for IGST.

Revision of GSTR-3

Once the form GSTR-3 has been completed, the option for revising it is unavailable as the data in this form is auto-generated, which limits the scope of any modifications. Nonetheless, if any errors or inaccuracies come to light, they can be rectified in the subsequent month’s GSTR-1 and GSTR-2 Forms.

How does GSTR-3 and GSTR-3B Reconciliation Work?

Central Board of Indirect Taxes and Customs (CBEC)1 introduced the GSTR-3B return for July and August 2017, alongside the mandate to file GSTR-3 for the same period. Upon GSTR-3 submission, if the actual liabilities differ from those previously stated in GSTR-3B, the system will automatically adjust the difference between GSTR-3B and GSTR-3. In case the actual liability in GSTR-3 surpasses the amount declared and paid while filing the form GSTR-3B, the taxpayer must settle the additional tax amount accompanied by interest on the excessive sum.

It is noteworthy that filing GSTR-3 should occur only after clearing the entire tax liability. Otherwise, the return will not be considered valid. If a taxpayer initially filed an invalid return and subsequently intends to settle the outstanding liability, it becomes necessary to refile Part B of GSTR-3.

How to file GSTR-3?

In order to file GSTR-3, the following steps may be undertaken:

  • The taxpayer may log in to their GST Account by entering their credentials.
  • The taxpayer will be required to verify the auto-generated information from GSTR-1 and GSTR-2.
  • The taxpayer may modify or add any other information if required.
  • The taxpayer will be required to digitally sign the GSTR-3.
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Details to be filed in GSTR-3

GSTR-3 format has been clearly prescribed by the government authorities, and it mainly consists of two parts: Part A, which is populated automatically from GSTR-1, GSTR-1A and GSTR-2 filed by taxpayers, and Part B, which necessitates manual completion. There are 15 distinct sections which are required to be filed as follows:

SectionDetails to be provided
1. GSTIN SubmissionAs a taxpayer, you are required to provide your PAN-based GSTIN.In case you don’t have a GSTIN, a provisional ID can also be provided.
2. Name of the TaxpayerHere, the legal name and trade name, if any, must be provided.
               3.   Turnover- following details for various types of turnovers
Taxable Turnover (other than zero-rated)Includes turnover from sales subject to GST, excluding zero-rated supplies.
Zero-rated supply on payment of TaxPertains to exports, where GST is payable on exported goods and services, and a refund can be claimed later.
Zero-rated supply without payment of TaxEncompasses exports with a Letter of Undertaking (LUT), allowing tax-free sales of goods overseas or to SEZ units.
Turnover from deemed exportsRelates to sales to overseas customers and specialized units within the country, where goods do not physically leave the country.
Turnover from exempted suppliesComprises goods and services exempted from GST. Tax paid on input goods and services used for these supplies is not refundable.
Turnover from Nil-rated suppliesInvolves goods taxed at 0% GST rate. Tax paid on input goods and services used for these supplies can be claimed as a refund.
Turnover from non-GST suppliesCovers goods and services not subject to GST but may attract local taxes.
Total TurnoverThe sum of all turnover types mentioned above represents the overall financial turnover for the reporting period.
4. Outward Supplies
Inter-State Supplies (net supply for the month)Taxable Supplies (Excluding Reverse Charge and Zero Rated Supplies): Include all your sale transactions, except those subject to reverse charge.Supplies subject to reverse charge: Includes sales where the responsibility for tax payment is shifted to the recipient or purchaser.Zero Rated Supplies Paid with GST: Includes Exports where GST is paid initially, with the possibility of claiming a refund. Sales Facilitated through e-commerce operators-Includes sales made via E-commerce platforms, attracting TCS.
Intra-State SuppliesThis section covers the net supply of taxable goods within the same state, encompasses transactions subject to reverse charge, and also accounts for online sales conducted through E-Commerce platforms.
Tax Implications of Amendments to Outward SuppliesHere, the alterations made in the sales invoices or the adjustments made in the invoice amount have a direct bearing on the Input Tax Credit (ITC) eligible for claiming, thereby affecting the overall tax liability.
5. Inward Supplies Attracting GST on Reverse Charge
Part A: Inward Supplies on which tax is payable on a reverse charge basisThis section encompasses your purchases (both inter-state and intra-state) that fall under the reverse charge mechanism, where the buyer is responsible for paying GST. The tax liability is calculated after considering invoices, credit and debit notes, any advances paid, etc.
Part B: Tax effect of amendments in respect of supplies attracting reverse chargeThis section shows the revisions made to the purchases subject to the reverse charge. Alterations made to the purchase amount directly influence the Input Tax Credit (ITC), subsequently impacting the payable tax amount.
6. Input Tax Credit (ITC)
Part IProvides a concise overview of the Input Tax Credit (ITC) available to you for the month, categorized as: Inputs: covering your raw materialInput Services: covering expenses like consulting feesCapital goods: including items such as computersITC from Input Service Distributor (ISD): Any ITC received from ISD
Part IIThis section records the modifications to details from previous months and their impact on the Input Tax Credit (ITC).
7. Addition and Reduction of amount in output tax for mismatch and other reasons
Correction of ITC for Mismatched or Duplicate Invoices or Debit NotesWhen there is a discrepancy in invoices, there might be an inadvertent duplication of ITC claims. Excess ITC claims due to duplicate purchase invoices will be reversed, increasing the tax liability.
Tax Liability Adjustment for Mismatched Credit NotesIncorrectly issued credit notes can result in erroneous ITC claims. Extra ITC claimed due to mismatched credit notes will be added to your tax liability.
Recovery of ITC for Rectified Mismatched Credit NotesSimilarly, if a lower ITC has been claimed due to mismatched credit notes, you can recover the additional ITC, which will reduce the output tax liability.
Offsetting Negative Tax Liability from Previous PeriodsWhen the excess tax was paid in previous months, that surplus tax paid will offset the output tax liability for the current month.
Adjustment of Advance Tax PaymentsThe advance tax payments made earlier in previous months are adjusted against the tax on supplies in the current period.
Input Tax Credit Reversal/Recovery (Other Reasons)This covers cases where ITC is reversed or reclaimed for various other reasons that have not been mentioned explicitly.
8. Total Tax Liability
On Outward SuppliesThis shows the tax amount payable on your standard sales, including inter-state transactions.
On Inward Supplies under Reverse ChargeThis indicates the tax amount owed on purchases that fall under the reverse charge mechanism.
On Account of ITC Reversal or ReclaimThis accounts for the additional tax payable or reduction available as a result of ITC reversal or reclaim.
On Account of Mismatch, Rectification or Other ReasonsThis includes tax liability arising from any other circumstances or reasons which have not been explicitly provided.
9. The credit of TDS and TCS
Details of TDS and TCS paidThis section includes the details furnished by you relating to the TDS and TCS paid, which will be reduced from the total tax liability in order to calculate the net tax amount to be paid.
10. Interest Liability
Interest on Delayed PaymentThe interest of 18% p.a. will be charged on delayed payments from the day following the date of filing till the date of actual payment made.  
11. Late Fee
Late Fee for Delayed PaymentsApart from the interest paid on the delayed payments, a late fee is also charged at the rate of Rs. 100 per day; however, the total late fee charged is subject to a maximum amount of Rs. 5000.
PART B
12.Tax payable and tax paidAs opposed to Part A, which is auto-populated, Part B is required to be filled manually by the taxpayer. In this Section, you are required to mention the tax which is to be paid under various categories such as CGST, SGST, and IGST. This data can be retrieved using the information entered in GSTR-1 and GSTR-2.
13.Interest, Late Fee, and any other amount (other than tax) payable and paidThis column includes the penalties imposed by the authorities on the taxpayers for the failure to comply with the rules and regulations.
14.Refunds Claimed from Cash LedgerIn case the tax which is to be paid is lesser than the amount displayed, then the difference between the two shall be refunded to the taxpayer, and that will be mentioned under this section.
15.Debit Entries in Electronic Cash/Credit LedgerThis section is auto-populated after you pay your taxes and submit the return.

After ensuring everything is correct, in the end, you are simply required to accept the declaration, which you must read carefully by choosing the authorized signatory and then finally submit it accordingly.

Conclusion

GSTR-3 holds importance within the GST framework as it indicates to the taxpayer the amount of  GST Liability for a particular month or the taxable period, which must be paid. It represents the total amount derived from sales and purchase records as per the information provided under GSTR-1 and GSTR-2, respectively, serving as the foundation for tax calculations. Throughout this article, we have delved into the various aspects of GSTR-3, its structure, and other key components that must be kept in mind by these taxpayers while filing this form. As discussed, Part A of the form is auto-populated based on the information already provided by the taxpayer, and Part B is to be filled manually. This reduces the possibility of any errors and mistakes on the part of taxpayers. Thus, it is a reprieve for small taxpayers from the complex regulations. However, if you are still caught in the web of intricate web taxation, you may take expert advice or hire professional help.

If you wish to know more regarding GST Returns, then you may contact Enterslice.

FAQs

  1. Who is eligible for GSTR-3?

    Every taxpayer who is registered under the GST and has a PAN-based GSTIN is required to file GSTR-3, regardless of whether any transaction has taken place during that month or not.

  2. What is the difference between GSTR-3 and GSTR-3B?

    While both forms are essential to filing the GST Return, GSTR-3 provides an overview of the inward and outward supplies and to compute tax liability, whereas GSTR-3B simply requires the information regarding total turnover and tax liability based on outward supplies and Input Tax Credit (ITC).

  3. Is it mandatory to file GSTR-3B monthly?

    Yes, it is mandatory to file GSTR-3B monthly.

  4. Can I file GSTR-3 without filing GSTR-1 and GSTR-2?

    No, GSTR-3 cannot be filed without filing GSTR-1 and GSTR-2 for a specified tax period.

  5. Am I required to file the GSTR-3 even if there are no transactions during the tax period?

    Yes, GSTR-3 is required to be filed even if there was no transaction made during the tax period.

References

  1. https://www.cbic.gov.in/

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