Difference Between GSTR-1 and GSTR-3 B

All businesses registered under GST should know the difference between GSTR-1 and GSTR-3B. Both returns are mandatory for a large number of taxpayers, and they are the basis of compliance with GST in India. Although they appear to be alike at first glance, they are not used in the same manner and need to be filed properly and correctly within the required time to avoid any fines.

To ensure that you can remain on track to meet the required criteria, this blog explains the nature, functions, and major differences between GSTR-1 & GSTR 3B to help you manage your tax liabilities effectively.

Role of GSTR-1 in the GST Ecosystem

The GSTR-1 Return is a monthly or quarterly return filed by taxpayers that contains information about all of their outward supplies for that month, as well as any related tax liability. This means that taxpayers must upload detailed information about each invoice so the Government can verify every transaction individually. The recipient of those supplies will then be able to accept those supplies and claim eligible input tax credits for them based on what was reported in the GSTR-1 Return.

The primary goal of GSTR-1 is to make sure that the information about outward supplies reported by the taxpayer is clear and matches the records of buyers who claim Input Tax Credit (ITC). GSTR-1 is to be submitted monthly in the case of businesses with an annual turnover of more than 1.5 crore. Small firms that have a turnover of not more than 1.5 crore can choose to file quarterly.

Notably, there is no payment of tax when one is filing GSTR-1; it is entirely a reporting exercise. Nevertheless, correct and timely reporting makes buyers claim ITC, and it also guarantees that the GST authorities clearly and consistently see the sales of a taxpayer.

Role of GSTR-3B in Tax Payment & Self-Assessment

As per the GST rules, every taxpayer must file a GSTR-3B within the 20th of the month or by the last working day of the month, or by the 22nd/24th of the month following the quarter. The GSTR-3B contains information about the supplies made during that time period, including the amount of GST to be paid, input tax credits claimed, and purchases subject to the reverse charge mechanism. Additionally, the GSTR-3B allows a taxpayer to calculate and report their tax liabilities for the relevant period.

Contrary to GSTR-1, GSTR-3B has a tax payment requirement- taxpayers have to compute their tax payable and submit the tax payment before the filing of returns. This is why GSTR-3B is an important component of self-assessment and payment of taxes. The most regular taxpayers have to submit GSTR-3B every month, but with businesses on the QRMP (Quarterly Return Monthly Payment) scheme, quarterly filing may be undertaken, with the monthly payments of tax being submitted.

GSTR-1 vs GSTR-3B: Functional Comparison

This is a comparison of the major differences between GSTR-1 and GSTR-3B:

As one can observe, GSTR-1 offers detailed sales information that enters the reconciliation process, whereas GSTR-3B is the real tax settlement form where the payments have to be made.

Tax Liability Flow: From GSTR-1 to GSTR-3B

Whereas GSTR-1 and GSTR-3B are separate, they are, in practice, interconnected. Here’s how the data flows:

• The invoices registered in GSTR-1: all Outward supplies are recorded, and a database of sales transactions is formed.
• ITC to Buyers: Buyers utilize the data contained in your GSTR-1 to claim Input Tax Credit in their own returns.
• Tax Liability in GSTR-3B: You compute your tax liability according to the total sales and purchases and pay tax through GSTR-3B.
• Reconciliation: GSTR-1 and GSTR-3B discrepancies have to be reconciled so that no notices or mismatches are made during audits.

Reconciliation is now more important than ever because the GST authorities are delving deeper into the mismatches between the details on the invoice and the tax paid. In other instances, governments can provide notices in situations where there are major discrepancies and the latest changes in regulations are making compliance even stricter.

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Conclusion

GSTR-1 and GSTR-3B serve different but complementary roles in GST compliance. GSTR-1 reports outward supplies and supports ITC claims, while GSTR-3B allows self-assessment and tax payment. Timely filing of both, along with regular reconciliation, helps avoid penalties and ensures a clean GST record.

Frequently Asked Questions

1. What are GSTR 3B and GSTR 1?
GSTR-1 captures in detail the outward supply, and GSTR-3B is a summary return that is used to report tax payable and declare taxes.

2. What is GSTR 1 in GST?
GSTR-1 is a submission that captures all the sales invoices and other details during a particular tax period.

3. What should happen in case of GSTR 1 and GSTR 3B difference?
Timing and reporting problems can exist and need to be reconciled immediately to prevent notices or missed matches in claiming input tax credit (ITC).

4. What is the turnover limit of GSTR 3B?
No particular turnover limit to GSTR-3B. The majority of ordinary taxpayers are obliged to file it every month, whereas qualified taxpayers under the QRMP system may file quarterly, along with payments of monthly tax.

5. How is it possible to claim ITC within GSTR-3B?
A taxpayer claims ITC through GSTR-3B basedupon the eligible purchases and valid tax invoices during the particular time period of his/her GST filing.