GSTR 1 and GSTR 3B are two of the most important GST returns that offer details of the sales and purchase data. GSTR 1 & GSTR 3B Reconciliation can seem a little complicated for many taxpayers as their filing happens on a monthly basis.
There are several reasons for facing mismatches in the two including but not limited to furnishing supplies under the wrong head in GSTR 3B or the time difference between filing GSTR 1 and GSTR 3B. GSTR 1 & GSTR 3B Reconciliation is important as it reduces the chances of omission and duplication of invoices among a lot of other advantages mentioned in the article. MIS reports of IRIS GST Software offer a comparative study and simplify the whole process.
Reasons for Mismatch in GSTR-1 and GSTR-3BLet us first understand the reasons for mismatches in GSTR 1 and GSTR 3B and why it is important to resolve these mismatches. And how MIS reports of IRIS GST Software can be exceptionally useful in this.
Reasons for mismatch in GSTR-1 and GSTR-3B
GSTR 1 and GSTR 3B are the two most important returns in the GST system. Any mismatch between GSTR 1 and GSTR 3B can lead to issues in the ITC claim. There can be multiple reasons for the mismatch:
- Misallocation: GSTR-1 is prepared at the invoice level and GSTR-3B is prepared at the aggregate level. This can lead to furnishing supplies under the wrong head in GSTR-3B, but declaring the same details correctly in GSTR-1.
- RCM Supplies: Interstate supplies made to unregistered persons not declared in GSTR-3B.
- Wrong tax heads: The total value of supplies is correctly shown but taxes are paid under the wrong head.
- Post-filing Amendments: Amendment in supplies made after GSTR-1 filed.
- Different filing periods: The time difference in reporting time of invoices in GSTR-1 and GSTR-3B.
Read more here: FAQs around mistakes in GSTR 3B & GSTR 1 and how to resolve them
Importance of GSTR-1 and GSTR-3B Reconciliation
It is crucial to timely determine the difference between GSTR 1 and GSTR 3B data. GSTR-1 and GSTR-3B are to be matched for checking the liabilities reported in both returns. Let us understand some reasons why it is important to reconcile GSTR 1 and 3B regularly…
- No Revisions: Reconciliation is important because no revision is allowed in the GSTR-3B return.
- Minimises Omissions and Duplication: Reconciliation reduces the chances of omission and duplication of invoices.
- Reduces chances of GST Litigation: GST authorities can issue show cause notices to reconcile the total sales disclosed in GSTR-1 and GSTRE-3B returns. Reconciliation reduces the chances of future litigation.
- Helps avoid GSTIN Suspension: Outward supplies declared in GSTR-1 must match with the summary total of supplies declared in GSTR 3B. In case of mismatches, GSTIN may be suspended.
- Aids accurate Tax Liability Calculation: Reconciliation helps to reach an accurate tax liability on the outward supplies made during the period.
- Timely Tax Error Rectification: It also assists to identify the errors in integrated taxes.
- Better ITC Calculation: GSTR-1 forms the base for the recipients of the supplies to claim input tax credit while filing their returns. Hence, the timely and accurate declaration in both the GSTR-1 and GSTR-3B is necessary.
- Helps to avoid penal action: To avoid late fees and interests for short payment or non-payment of Tax.
How IRIS GST Software can help avoid GSTR 1-GSTR 3B mismatches and reconciliation issues?
GST reconciliation issues can be easily identified using technology instead of just relying on spreadsheets and pivots. IRIS GST software has pre-defined validation checks that ensure the mismatches in data are identified automatically and highlighted for correction. While an Indirect Tax Team doing manual reconciliation spends 70% of their time getting the data in order, a team using GST software can immediately start working on the rectification as the mismatches get automatically identified in the software.
IRIS GST software provides excellent recon features to address GSTR 1-GSTR 3B mismatches. Here’s how IRIS GST Software can help:
- Reduces Manual intervention: Upload CSV or integrate your ERP to upload the sales and purchase data directly in the GST Software. It reduces manual intervention which prevents the chances of errors.
- Automation: You get the facility of auto-populating GSTR 3B data on the basis of details uploaded in IRISGST software. Thus the user can ensure 100% accuracy in reporting.
- Holistic view of data: You can also compare data at a GSTIN level or cumulatively at PAN level or group company level.
- MIS Reports: IRIS GST Software offers multiple MIS reports that help CFOs pinpoint the issue of data mismatch and work on rectification
IRIS GST is providing multiple reports in MIS Report sections, through which the user can compare the GSTR 1 and GSTR 3B details.
GSTR 1 vs GSTR 3B Comparative MIS Report
- GSTR-1 vs. GSTR-3B Comparative report provides a comparison between GSTR-1 and GSTR-3B data. The following is the graphical representation for your reference:
- Below is the representation of tax amount comparison – filing period-wise.
- Here is a comparison of supply type-wise taxable value:
What are the advantages of GSTR-3B vs. GSTR-1 Comparative Report?
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- Helps you download reports for multiple financial years and multiple filing periods
- Get data comparison at GSTIN and PAN level and data comparison for every field like outward taxable value, and tax. Taxable value and Tax value comparison filing period-wise.
- Get details of total tax liability reported in GSTR-1 matched with GSTR-3B, or underreported/overreported in GSTR-3B with respect to a particular filing period.
- List of top ten GSTINs in which tax liability is under/over reported in GSTR-3B in comparison to GSTR-1
- Financial year-wise comparison of Total taxable value and tax value as per GSTR-1 and GSTR-3B to check the trend of the taxable value and tax.
Note: All these comparisons are presented in a tabular format as well as through charts/graphs. So that the user can easily understand the mismatch status.
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