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Arjuna (Fictional Character): Krishna, what are the changes notified by government in filing GSTR-1 and GSTR-3B from 1st January 2022?

Krishna (Fictional Character): Arjuna, Earlier taxpayers (Supplier) were not able to file GSTR-1 or use the IFF on the GST portal if they had pending GSTR-3B filings for the past two months (monthly filer) or for the last quarter (quarterly filer) as per CGST Rule 59(6). From 1st January 2022, taxpayers cannot file GSTR-1 if the preceding month’s GSTR-3B is not filed. For Ex. If a supplier does not file GSTR-1 for the month of Jan 2022, he shall not be allowed to file GSTR-3B for the month of Feb 2022.

Arjuna (Fictional Character): Krishna, what are the consequences of non-filing, late filing, or improper filing of GSTR-1?

Krishna (Fictional Character): Arjuna, The consequences of non-filing, late filing, or improper filing of GSTR-1:

Case 1: If the supplier fails to file GSTR-1 on or before the 11th of the following month the recipient of the goods or services cannot claim ITC of the same in GSTR-3B for that month as GSTR-1 is not filed and the ITC of the same is not reflected in GSTR-2B of the recipient.

File GSTR-1 in time to avoid litigations in GST

For Ex. If the supplier does not file GSTR-1 for the month of Jan 2022, the recipient shall not be allowed to claim ITC for the same in GSTR-3B of Jan 2022.

Case 2: If supplier files GSTR-1 after 11th of the following month the recipient of the goods or services cannot claim ITC of the same for that month but can claim in GSTR-3B of the subsequent.

For Ex. If the supplier files GSTR-1 for the month of Jan 2022 after 11th of the following month, the recipient shall be allowed to claim ITC for the same in GSTR-3B for the month of Feb 2022.

Case 3: If supplier files GSTR-1 on or before 11th of the following month but mentions incorrect GST number or mentions B2B supplies as B2C, recipient of the goods or services cannot claim ITC of the same in GSTR-3B for that month.

For Ex. If the supplier files GSTR-1 for the month of Jan 2022 incorrectly and if the amendment to the same is made in GSTR-1 of March 2022, the recipient shall be allowed to claim ITC for the same in GSTR-3B for the month of Mar 2022.

 

Therefore, from 1st Jan 2022 its mandatory for the supplier to file GSTR-1 correctly and timely.

Arjuna (Fictional Character): Krishna, what are the consequences if the supplier declares excess self-assessed tax i.e., outward tax liability in GSTR-1?

 

Krishna (Fictional Character): Arjuna, from 1st January 2022, a new explanation to section 75(12) is inserted to the effect that the output tax relating to any invoices which are reported in GSTR-1 but not included in GSTR-3B shall be considered to be self-assessed tax for the purposes of sec. 75, and the same can be recovered u/s 79 without issuing SCN.

Arjuna (Fictional Character): Krishna, what precautions should the recipient take against the above issues?

Krishna (Fictional Character): Arjuna, the recipient of the goods or services should identify the defaulting supplier for this. The recipient can also check whether his supplier has filed GSTR-1 or not by using search taxpayer option on the GST portal. If supplier does not file GSTR-1 timely and correct it can affect the business relationship adversely and the recipient can also recover interest from supplier as recipient cannot claim ITC of the same.

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CA Umesh Sharma
(Partner)
Category GST   Report

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