GSTR-3 - What is GSTR-3 - How to file GSTR-3

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Date: 22 Oct 2022


A Guide to GSTR-3

What is GSTR-3?

The GSTR-3 is a document that includes information on all transactions made throughout the month, including stock transfers between states, sales, and purchases. This return is automatically prepared based on the data in the GSTR-1 and GSTR-2 filed for the same tax period.

All GST-registered taxpayers who have chosen neither the composition scheme nor a Unique Identification Number must submit this return (UIN). Non-resident taxpayers are also not eligible to file this return.

 

Who should file GSTR-3?

Regardless of whether there were any transactions during the month or not, every registered individual is required to file GSTR-3. However, specific registered individuals are exempt from submitting GSTR-3: 

  • Input Service Distributors

  • Composition Dealers

  • Non-resident taxpayer

  • Those responsible for collecting TCS

  • Those who must collect TDS

  • Online information and database access or retrieval services (OIDAR), who are responsible for paying their taxes (as per Section 14 of the IGST Act)

 

How to revise GSTR-3?

Since the form is automatically generated and has limited room for amendments, it is impossible to make changes after the GSTR 3 filing is complete. If there are any changes or errors, these can be corrected in the GSTR 1 and GSTR 2 forms for the next month.

 

Reconciliation of GSTR-3 and GSTR-3B

For the months of July and August 2017, the CBEC adopted GSTR 3B, a straightforward return form. Additionally, GSTR-3 forms must be submitted for July and August 2017. If actual liabilities differ from those stated in GSTR 3B when GSTR 3 is filed, the system will automatically update the (difference) between GSTR 3B and GSTR 3. If the actual liabilities reported in GSTR-3 are greater than those reported and paid using GSTR-3B, you will be required to pay the difference in tax and interest.

 

What happens if the GSTR-3 is not filed or filed late?

Missing the GSTR 3 filing deadline might have significant consequences. The taxpayers won't be able to file the GSTR 1 form if they don't file the GSTR 3 for a month. Following that, the taxpayer will face fines and penalties.

If there is a delay in submitting the GSTR 3 returns, the taxpayers will be responsible for paying a late fee with an interest of 18% per year. The taxpayer will determine the ultimate sum based on the entire amount still owing that must be paid. The period is from the following day or the 16th of the month until the payment date.

Each Act will incur a late fee of Rs. 100 per day. According to this, the late cost is implied to be Rs. 100 for CGST and Rs. 100 for SGST, for a total of Rs. 200 per day. The most that can be levied as a late fee is Rs. 5000. IGST, however, does not impose late fees.

 

Prerequisites for GSTR-3

The following are the prerequisites for filing a GSTR-3:

  1. You must be a GST-registered taxpayer with a 15-digit PAN-based GSTIN to submit the GSTR-3.

  2. You are supposed to submit GSTR-1 and GSTR-2.

  3. To validate your return using an EVC (electronic verification code) or a digital signature certificate, you must either have an OTP from your registered phone (class 2 or higher). Using an Aadhar-based e-sign, you can also submit your GST returns.

  4. Before submitting this return, you must pay the government the tax (GST) you owe for this month. Even before you file your return with the GSTN, you can see this information in your GSTR-3 summary, which can be obtained using your GST portal.

 

Details to be provided in GSTR-3

After filing GSTR-1 and GSTR-2 returns, the GSTR-3 return is submitted. Most of the data required for the returns will be pre-populated depending on the submission of GSTR-1 and GSTR-2. Only a small portion of the data will require taxpayer verification, editing, or addition. 

  1. Provide the GSTIN

If you don't already have one, you can use your provisional ID as your GSTIN.

  1. The taxpayer's name

The taxpayer's legal and business names (will be auto-populated)

Mention the month and year that the GSTR-3 is being filed for.

The GSTR-3 consists of two sections. GSTR-1, GSTR-1A, and GSTR-2 automatically fill out Part A, whereas Part B needs to be filled out by hand.

Part A (auto-populated)

  1. Turnover

The overall turnover of all types of supplies will be included in this section. The division of total turnover will be between:

  1. Other than zero-rated, taxable turnover: This includes regular sales to registered and unregistered buyers.

  2. Zero-rated supply on payment of tax: This will include exports that are paid by paying IGST (later reclaimed as a refund). 

  3. Zero-rated supply without tax payment: This will include exports paid with bond/LUT.

  4. Items sold to SEZ are deemed to be exports (the goods do not leave the country).

  5. Exempted: These are items and services that are exempt from the GST.

  6. Nil Rated: These are products or services that are exempt from GST.

  7. Non-GST supply: These goods, such as gasoline and electricity, fall outside the purview of the GST, such as gasoline and electricity.

  1. Outward supplies

This heading will include an overview of all of your monthly sales. The data will be automatically retrieved from your GSTR-1.

  • Supplies between States (Net Supply for the month)

All interstate sales will be listed under this section with the following information.

  1. Total sales excluding those to which reverse charge applies and exports; taxable supplies (other than zero-rated and reverse charge supplies).

  2. Services attracting a reverse charge-tax that the service recipient must pay: These are purchases your customer will make using the reverse charge for GST.

  3. Exports paid for by IGST are considered zero-rated supplies (later reclaimed as a refund).

  4. The supplied value through an e-commerce operator enticing TCS-(rate-wise) out of the supplies listed under a will includes the proportion of sales made through e-commerce. Additionally, the e-commerce operator's GSTIN will be shown.

  • Intra-State supplies (Net supply for the month)

Similar to the previous heading, but with information on intra-state sales instead.

  • Tax effect of amendments made in respect of outward supplies

The modifications to your sales invoice will be included in this. If the sum varies, the ITC to be also claimed changes, which affects the amount of tax that must be paid to the government. It could lead to overpayment or underpayment. This section's data aids in keeping track of invoices that have had changes made to them as well as how those changes have affected the tax amount.

  1. Inward supplies are subject to the reverse charge, including services imported (Net of advance adjustments)

Your monthly purchases and received supplies will be included under this heading. The data that you have entered under the GSTR-2 will be used to pull the information from your records automatically.

  • Inward supplies on which tax is payable on a reverse charge basis:

Your purchases that qualify for reverse charge are included in this (you, the buyer, will pay GST). Here, both intra-state and interstate sales are listed. Net of invoices, debit/credit notes, advances paid, and revisions of advances, the tax liability resulting from the reverse charge

  • Tax effect of amendments in respect of supplies attracting reverse charge:

This will include any alterations to your purchases that result in a reversal charge. If the amount changes, the ITC amount will also change, which will alter the tax due. It could lead to overpayment or underpayment. This section's data aids in keeping track of invoices that have had changes made to them as well as how those changes have affected the tax amount.

  1. Input tax credit

ITC on inward taxable supplies, including imports and ITC, received from ISD (Net of debit notes/credit notes)

  • Part I

You will have access to a monthly overview of ITC under this title. ITC will be displayed independently for:

  1. Inputs– Your raw materials

  2. Input Services– Such as consulting fees

  3. Capital Goods

This page will also display the ITC received from Input Service Distributor (ISD). After changing the debit and credit notes, ITC will be displayed.

  • Part II

This section will discuss the updates to the earlier month's details and how they affected the ITC.

  1. Input tax creOutput tax amounts may be increased or decreased for mismatches and other reasons.

The ITC and tax liability discrepancies between the initial returns and any modifications submitted this month will be included in this section. This data will be obtained from GSTR-2.

  1. ITC claimed on duplicate or mismatched invoices or debit notes: If there are duplicate invoices, there may be double ITC claims. Duplicate purchase invoice excess ITC claims will be reversed and applied to the tax liability. 

  2. Tax liability on mismatched credit notes: Incorrect credit notes issued by you will also result in incorrect ITC. Your tax obligation will now include any additional ITC that was claimed owing to a mismatch.

  3. Reclaiming upon correcting incorrect invoices or debit notes: Mismatch, in this instance, has resulted in a lower ITC claim. Since you are eligible for greater ITC, the additional sum will be deducted from your output tax obligation.

  4. Reclaim on rectification of mismatch credit note: This is the opposite of (b) in that a lower ITC has been requested and would operate similarly to (c). 

  5. Negative tax liability from prior tax periods: This is the result of extra tax paid in earlier months and will be deducted from the output tax liability for this month. 

  6. Tax paid on advances from prior tax years is offset by the tax on supplies made during the current tax year. This pertains to taxes paid this month and payments made in advance for goods received this month. 

  7. Reversal or reclamation of input tax credits: This applies to ITC that is done so for any other reason.

  8. Total tax liability

This section is the most important since GST Portal will use it to determine your tax liability under the various CGST, SGST, and IGST tax heads. It will display the split as follows:

  • Outbound supplies: This tax is due on all regular transactions, including those between states. 

  • On Inward Supplies Under Reverse Charge: This refers to the tax owed on purchases that qualify for reverse charge. 

  • On account of ITC reversal or reclaim: This is the additional tax owed or decrease that is possible due to an ITC reversal or reclaim. The data is taken from GSTR-2. 

  • On account of a mismatch, rectification, or other reasons: This includes any tax obligations resulting from unspecified other causes.

  1. TDS and TCS Credit

The TDS and TCS information that you paid will be listed under this section. To determine the net tax amount you must pay, the TDS/TCS amounts will be subtracted from the total amount of responsibility.

  1. Interest liability: The total amount of interest you owe the government for various reasons (mismatches in tax liability, ITC claimed, ITC reversal or delay in tax payments or filing returns).

  1. Late Fee: Any late fees under various tax heads must be paid (central, state and union territory GST).

Part A (to be filled manually)

  1. Tax payable and paid

You must enter the proper amounts in the correct columns.

If your tax liability is Rs. 30,000 and your ITC is Rs. 10,000, for instance, you can choose to pay Rs. 20,000 in cash and Rs. 10,000 through ITC.

  1. Interest, late fees, and any additional sums that are owed and paid (other than taxes)

The amount due and the amount paid for interest, late fees, and the breakdown of tax headings should be included here.  The IGST has no late fees.

  1. Refund claimed from Electronic cash ledger.

If it is determined that the tax paid was higher than the actual amount, you will receive a refund for the difference. 

  1. Debit entries in electronic cash/credit ledger for tax/interest payment - Once you pay your taxes and file your returns, this area will be automatically filled in.

Last, you must sign and validate the GSTR-3 return before filing it, either using a digital signature certificate (DSC) or an Aadhar-based signature verification process.