Filing tax returns by taxpayers is mandatory, whether taxes are filed monthly, quarterly, or on annual basis. Now, with the implementation of the newly reformed Goods and Services Tax (GST) Act, 2017 in the country, it has brought several changes to our traditional method of indirect taxation. Although the GST Act, 2017 has ‘unified’ various indirect taxes (VAT, Excise Duty, Customs Duty, and Service Tax) under one roof, it has further categorized the filing of taxes into different segments. One such tax filing is called the GSTR-3 return filing.

Thus, in this post, we shall read insights on GSTR-3 return filing, eligibility for filing return as well as knowing the format of Form GSTR-3 and the rules and regulations that taxpayers must follow when filing their returns online on the GST Common Portal.

What is GSTR-3 Return?

In simple words, GSTR-3 is basically a monthly summary of the information which taxpayers, who are registered under GST, have provided at the time of filing GSTR-1 (contains details of sales or outward supplies) and GSTR-2 (contains details of purchases or inward supplies) returns, respectively. These returns are usually filed by taxpayers and contain details of purchases (inward supplies) and sales (outward supplies) of goods or services or both, along with the amount of GST (tax) liability that was made during a given period of time.

When a taxpayer files GSTR-3, it shows the amount of GST liability of the person or business for the specified month.

Who must File GSTR-3 and those not Eligible

GSTR-3 is required to be filed by all persons and business entities who are registered under GST, even if no transactions or business acitivity were carried out during the month.

On the other hand, the persons and business entities who are not eligible to file GSTR-3 are listed as follows:

• Composition Dealers
• Non-resident taxable person(s)
• Persons liable to collect TCS (Tax Collected at Source)
• Persons liable to deduct TDS (Tax Deducted at Source)
• Input Service Distributors (ISD)
• Suppliers of Online Information and Database Access or Retrieval Services (OIDAR), who are required to pay tax by themselves as per Section 14 of IGST Act.

Criteria for Filing GSTR-3

There are, however, certain criteria or pre-conditions for filing GSTR-3 online on the GST Common Portal. The criteria are as follows:

• Taxpayers must be registered under GST.

• For taxpayers who are required to file a return using DSC (Digital Signature Certificate), the DSC or e-signature must be provided and other taxpayers ought to have their AADHAR details provided.

• GSTR-1 and GSTR-2 needs to be filed for the tax period.

Due Date for Filing GSTR-3

As stated in the GST Act, the due date for filing GSTR-3 is 20th of the subsequent month. However, there is a 5-day gap between GSTR-2 and GSTR-3 filing, for the purpose to correct any errors and discrepancies provided in the details by the taxpayer.

For businesses with turnover less than Rs. 1.5 crores, quarterly returns are relevant whose due dates will be announced by the GST Council.

What happens if GSTR-3 is filed late?

If taxpayers are late in filing GSTR-3, then such person or business may be liable to pay interest and a late fee as well. The interest levied for late filing of GSTR-3 is 18% per annum. It must be calculated by the taxpayer on the amount of outstanding tax that is to be paid. The time period could be from the next day of filing (i.e. 16th of the month) to the date of payment.

While the late fee is Rs. 100 per day, in accordance with the GST Act. This means that it is Rs. 100 under CGST and another Rs. 100 under SGST. This makes a total of Rs. 200 per day and will keep getting incremented with the days for not filing the return. However, the maximum amount of such penalty and fine is Rs. 5,000. There is no late fee on IGST.

What happens if GSTR-3 is not filed?

In case if GSTR-3 return is not filed, then the GSTR-1 of the subsequent month cannot be filed either. Hence, late filing of GST return could have a cascading impact, which may also oblige taxpayers to pay hefty fines and penalty.

How to Revise GSTR-3?

Taxpayers must note that once GSTR-3 is filed, it cannot be revised. Any mistake made in the return may be revised in the next month’s GSTR-1 and GSTR-2 returns. Direct revision in GSTR-3 is not possible as GSTR-3 is auto-generated without provision for editing.

How will GSTR-3 and GSTR-3B be Reconciled?

GSTR-3B is a simple return which is introduced by the CBEC for the months of July and August. GSTR-3 will also need to be filed for July and August. On filing GSTR 3 return, if the actual liabilities are different from those declared in GSTR-3B, then the system will automatically replace the (difference) between GSTR-3 and GSTR-3B. In case the actual liabilities in GSTR-3 are higher than the ones declared and paid with GSTR-3B, the taxpayer must pay the extra tax amount along with an interest on that extra amount.

GSTR-3 ought to be filed most effective after paying complete tax liability, otherwise it will not be treated as a valid return.

If the taxpayer has filed an invalid return and later on he/she desires to pay the remaining liability, then he/she has to file Part B section of GSTR-3 again.

Details to be Furnished in GSTR-3

In this section, we are going to see what details are required to be furnished when filing GSTR-3.

The various components of GSTR-3 include the following:

• GSTR-3 consists of the details of both the outward and inward supplies, so that it will be auto-populated from GSTR-1 and GSTR-2 returns, respectively.

• In this return, the details concerning Input Tax Credit (ITC) ledger, Cash ledger and Liability ledger might be updated in real-time. The information of ITC, payment of tax, IGST and cess can be auto-populated in the return in real-time via the debit entry in credit or cash ledger.

• Taxpayers can claim excess of payment of tax as a reimbursement for which there is a separate field provided in the return. Also, he/she can carry forward the excess ITC balance.

A total of 15 different headings are given in the format of Form GSTR-3, as prescribed by the government of India.

In the following, we shall explain each heading, along with details that are required to be provided by taxpayers when filing GSTR-3.

1. Provide GSTIN

Provisional ID can also be used as GSTIN (Goods and Services Tax Identification Number) if taxpayers do not have a GSTIN.

Note: GSTIN provided to each taxpayer is a unique ID, consisting of 15 characters based on the person’s PAN (Permanent Account Number) and is specific to each state.

2. Name of the Taxpayer

Name of the taxpayer, which includes legal and trade name (may be auto-populated).

Month, Year: Taxpayer must mention the appropriate month and year for which GSTR-3 is being filed.

Note: GSTR-3 is divided into two parts, Part A and Part B, respectively. Part A is auto-populated from GSTR-1, GSTR-1A and GSTR-2, whereas Part B is required to be filled up manually by the concerned individual or business entity.

PART A (auto-populated)

3. Turnover

This heading generally consist of the total turnover of all types of supplies. The total turnover could be bifurcated between:

(i) Taxable Turnover [other than zero-rated]: Taxable turnover has normal sales to both registered and unregistered buyers.

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

(iii) Zero-rated supply without payment of tax: This will encompass exports that are paid with bond/LUT (Letter of Undertaking).

(iv) Deemed exports: These are goods/items that are sold to SEZ (the goods do not actually leave the country).

(v) Exempted: These are goods or services which do not attract Goods or Services tax.

(vi) Nil Rated: These are goods/services which attract 0% Goods Or Services TAx(GST).

(vii) Non-GST supply: These include goods such as petrol, electricity etc. that are outside the scope of GST.

4. Outward Supplies

This heading will incorporate summary of all the sales of the person or business entity during the month. The records may be pulled automatically from his/her GSTR-1.

4.1 Inter-State supplies (Net supply for the month)

This heading will comprise all inter-state sales with the following details:

1. Taxable supplies (apart from reverse charge and zero-rated supply) [Tax Rate Wise]: Total sales besides on the ones on which reverse charge applies and exports.

1. Supplies attracting reverse charge-tax payable by recipient of supply: These are sales on which the person or business’ purchaser will pay GST under reverse charge.

1. Zero-rated supply made with payment of IGST: These are exports which are paid with the aid of paying IGST (later reclaimed as refund)

1. Out of the supplies cited at A, the value of supplies made through an e-commerce operator attracting TCS [Rate wise]: This will contain the portion of sales made through e-commerce (point A has the total sales along with e-commerce sales). GSTIN of e-commerce operator will also be displayed.

Note:

• Zero-rated supplies made without payment of taxes, i.e. exports through bond/LUT will now not be included.

• Amendments of supplies originally made under the reverse charge basis will not be included in Table 4.

4.2 Intra-State Supplies (Net supply for the month)

This is similar to the above heading, except that this will contain information of intra-state sales.

4.3 Tax impact of amendments made in respect of outward supplies

This will include the adjustments made to the taxpayer’s sales invoice. If the amount is changed, the amount of ITC to claim also gets changed which impacts the tax payable to the government. It may bring about extra or under payment. The details under this heading enables to maintain track of invoices on which changes have been made and the impact of the change on the tax amount.

5. Inward supplies attracting reverse charge having the import of services (Net of advance adjustments)

This heading will contain taxpayer’s purchases throughout the month and supplies which he/she received throughout the same month. The information will be populated automatically using the data which he/she had recorded in GSTR-2.

5A. Inward supplies on which tax is payable on reverse charge basis

This includes taxpayer’s purchases where a reverse charge is applicable (the buyer, which here is the taxpayer, will pay GST). Both inter-state and intra-state sales appear here. Tax liability due to reverse charge is net of invoices, debit or credit notes, advances paid, and adjustments of advances.

5B. Tax effect of amendments in respect of supplies attracting reverse charge

This will contain the changes made to taxpayer’s purchases which attracts a reverse charge. In case, the amount is changed, then the amount of ITC also will surely be changed which changes the tax payable. It may result in excess or under payment. The details under this heading facilitate keeping track of invoices on which adjustments have been made and the effect of the changes on the tax amount.

6. Input Tax Credit

ITC on inward taxable supplies, such as imports and ITC obtained from ISD [Net of debit notes/credit notes]

Part I

This heading will contain a summary of ITC available to the taxpayer during the month. ITC could be shown separately for:

• Inputs (taxpayer’s raw materials)
• Input Services (such as consulting fees)
• Capital Goods (such as laptop)

ITC availed from an Input Service Distributor (ISD) can also be shown here. All ITC will appear once the adjustment of debit/credit notes done.

Part II

This part will incorporate adjustments made to earlier month’s details and their impact on ITC.

7. Addition and reduction of amount in output tax for mismatch and other reasons

This heading will contain the mismatches in ITC and tax liability between the original returns and any adjustments filed for the duration of the current month. These details can be sourced from GSTR-2.

1. ITC claimed on mismatched or duplication of invoices or debit notes: In case mismatch of invoices, there may be double claiming of ITC. The excess ITC claimed from duplicate purchase invoices will be reversed and delivered to the tax liability.

1. Tax liability on mismatched credit notes: Incorrect or mismatched credit notes issued by the taxpayer will also result in incorrect ITC. Extra ITC claimed due of mismatch will now be introduced in the taxpayer’s tax liability.

1. Reclaim on rectification of mismatched invoices/Debit Notes: This is the opposite of point A mentioned above. In this case, mismatch has caused to claiming lower ITC. Taxpayer is entitled to more ITC and so the additional amount will be reduced from the output tax liability.

1. Reclaim on rectification of mismatch credit note: (Reduce): This is contrary to the above point B, i.e. a lower ITC has been claimed and will work in the same manner as point C mentioned above.

1. Negative tax liability from previous tax periods: This is due to excess tax paid throughout the previous months and will be reduced from output tax liability of this month.

1. Tax paid in advance during earler tax periods and adjusted with tax on supplies made in current tax period: This refers to tax paid along with advance payments in earlier months for supplies received during this month.

1. Input Tax credit reversal/reclaim: This refers to ITC being reversed or reclaimed because of any other reason.

8. Total tax liability

This is the primary component as GST Portal will calculate the tax liability here under separate tax heads of CGST, SGST and IGST, respectively.

It will show the subsequent break-up:

8A. On outward supplies: This is tax payable on the taxpayer’s normal sales together with inter-state sales.

8B. On inward supplies under reverse charge: This is the tax payable on which purchases attract a reverse charge.

8C. On account of ITC reversal or reclaim: This is the additional tax payable or reduction available due to ITC reversal or reclaim. The information flows from Table 11 of GSTR-2.

8D. On account of mismatch/rectification/other reasons: This will include tax liability due of any other reason.

9. Credit of TDS and TCS

This heading will contain the details of TDS and TCS paid by taxpayers. The amounts of TDS/TCS will be deducted from the total liability to arrive at the next tax amount the taxpayer must pay.

10. Interest liability (Interest as on..)

Interest is levied on delay of payment. Rate of interest is 18% per annum. It must be calculated by the taxpayer on the amount of outstanding tax to be paid. Time period will be from the following day of filing (i.e. 20th of the month) to the date of payment.

This heading indicates the reason and the amount of interest applicable. Break-up into CGST, SGST, IGST and Cess will be given.

• Output liability on mismatch: The taxpayer’s tax liability has increased due to the change in sales invoice and he/she must pay interest on the increased amount.

• ITC claimed on mismatch invoice: Taxpayer’s tax liability has increased due to a change in purchase invoice and ITC was claimed on such invoice/bill. He/she has to pay interest on the increased amount.

• On account of other ITC reversal: Taxpayer’s ITC claimed was reversed which has increased his/her tax liability and so, interest is payable.

• Undue excess claims or excess reduction [refer to Section 50(3)]: Taxpayer has claimed extra ITC and now he/she is required to pay interest.

• Credit of interest on rectification of mismatch: Taxpayer had paid interest on mismatch and now the interest is reversed or credited back.

• Interest liability carry forward: Taxpayer had an interest liability that he/she have paid partly. The balance amount will be carried forward.

• Delay in payment of tax: This is due to late payment or late filing of return.

• Total interest liability: Finally, it will show the total interest payable under CGST, SGST and IGST, respectively.

11. Late Fee

A late fee is also applicable along with interest on delayed return filing. Late fee is Rs. 100 per day,while the maximum fine is Rs. 5,000.

Note: There is no late fee for IGST.

Part B

This part will be filled up manually via the taxpayer. Part A is shown by the GST Portal as populated automatically.

12. Tax payable and paid

Taxpayers must fill up the appropriate columns with the appropriate amounts.

For instance, suppose you have a tax liability of Rs. 30,000 and ITC of Rs. 10,000, you can choose to pay Rs. 20,000 in cash (fill column 3) and Rs. 10,000 through ITC (fill appropriate columns under 4,5,6).

13. Interest, Late Fee and any other amount (other than tax) payable and paid

Here, taxpayers must fill in the amount payable and the amount paid under interest, late fee with the break-up of tax heads.

Note: There is no late fee for IGST.

14. Refund claimed from Electronic cash ledger

If it is not found that the tax paid is higher than the actual amount, then the difference will be refunded to the taxpayer.

Note:

• Refund from cash ledger can only be claimed when all return-related liabilities for the month have been discharged.

• The refund claimed (Table 14) will result in a debit entry in electronic cash ledger on the filing of valid GSTR-3.

15. Debit entries in electronic cash/Credit ledger for tax/interest payment [to be populated after payment of tax and submissions of return]

This section will be automatically filled in whilst the taxpayer pays his/her taxes and files ones returns.

Finally, do not forget to sign off with a declaration, stating that all information has been furnished and is correct.

Filing GSTR-3

GSTR-3 must be filed online on the GST Common Portal. The taxpayer has to follow these simple steps:

• The taxpayers need to login to their GST portal account.
• Verify the auto-generated statistics from the GSTR-1 and GSTR-2.
• Edit and add other information.
• GSTR-3 return ought to be digitally signed via the authorized person cited on the GST account.