What If GSTR-3B Is Given Return Status with Retrospective Effect

In one of the latest notifications released on 9th October 2019, the CBIC has notified that GSTR-3B will replace GSTR-3 for all purposes with retrospective effect from 1st July 2017. 

The GSTR-3B return was filed monthly as a provisional return and means of paying taxes, as GSTR-3 was put on hold ever since the implementation of GST. In addition, taxpayers used this return to make a summary declaration of their sales, output taxes and claim the input tax credit.

If GSTR-3B is given return status with retrospective effect, it could result in legal implications for those taxpayers who did not file this return accurately, or who made genuine mistakes while filing the same.

Most taxpayers, until now, had not been reconciling data with their books of accounts while filing their GSTR-3B return as it was a provisional return. This has resulted in a mismatch of data while filing the annual GST return, and nothing could be done as the GSTR-3B is a return which cannot be revised.

Also Read: Important Update to GSTR-3B Filers; Provisional ITC Now Limited to 20%

In addition, with the GSTR-3B replacing GSTR-3, the declaration of input tax credit also becomes vital especially for a month like September, which is the last month to claim the input tax credit for the FY 2018-19.

So with this decision taken at this point, with just a few days to go before the 20th October due date, taxpayers will have to be extra cautious while declaring data and should only do so after a complete and thorough reconciliation.

Some of the steps taxpayers can take are to undertake a reconciliation between the books of accounts and the returns filed for the entire FY 18-19 and check for invoices which have not been declared.

A reconciliation also needs to be carried out between the GSTR-2A and GSTR-3B returns. Last, but not least, taxpayers should ensure that vendors update and amend their GSTR-1 returns appropriately where invoices are missing from the GSTR-2A return, but have been received by the taxpayer. 

The above steps should remove unnecessary hassles at the time of filing the annual GST return, and reduce the chances of receiving demand notices from the tax department.

For any clarifications/feedback on the topic, please contact the writer at athena.rebello@cleartax.in