Amendments to GSTR-1: Gateway to Litigation?

Amendments to GSTR-1: Gateway to Litigation?

Outward supplies are recorded using GSTR-1, which can be used for a variety of purposes, including:

· GSTR 1 – Supplier Helps in the Assessment of Outward Liabilities

· GSTR 1 assists in the verification of incoming supplies.

· GSTR 1 is the basis for allocating GST to states, UTs, and the federal government.

· GSTR-3B is used to discharge the resulting tax liability.

Expectations

For outward liabilities, there is no difference in the values filed in GSTR-1 and GSTR-3B.

All info, including amendments, filed in GSTR-1 of a tax period should be discharged in GSTR-3B of the same tax period, not earlier (even if it saves interest) or later, resulting in no difference.

Is this a rational or practical expectation?

I assume not always, which is why GSTR-1 allows modifications (revisions at the line-item level) and spillover into future cycles or financial years.

GST officers are angry at GSTN for presenting a comparative report for GSTR-1 vs. GSTR-3B, causing them to send warnings for the disparity. This is a very typical note that almost every taxpayer gets for "Difference/Mismatch in Outward Liability recorded in GSTR-1 versus GSTR-3B" for tax period(s) based on the GSTN Tax Comparison report.

Furthermore, discharging liability through 3B and making corrections through GSTR-1 which occur in separate tax years, and it may be necessary to seize the interest liability on unpaid liability before making GSTR-1 corrections, as segregating GSTR-1 data is difficult and time-consuming.

The report's analogy isn't similar.

Yes, you read that correctly: GSTR-1 amendments have period marking on any data submitted, while GSTR-3B amendments are inserted or changed in the periodic values themselves, resulting in period identity being lost until the taxpayer declares and explains himself out of the system.

The Failures

GSTR-1 is unable to represent values in a suitable way!

Any financial disclosure we see (Financial Statements, Schedules, and Income Tax Returns) is backed up by underlying facts and workings that substantiate the principles (in brief, self-explanatory) period by period, but this is not the case for GSTR-1. It also lacks a summary to present the liabilities based on data submitted to validate the values submitted with internal workings.

Even so, looking at the GSTR-1 documents and seeing no Summary of NET tax obligation payable on the GST portal can be perplexing, unless the taxpayer refers to its own internal workings.

There is little information about how the system measures values at the line-item stage, so independent verification is required.

Fortunately, since a few months, you can see summarised liability based on data filed in GSTR-1 without any tax period breakdown of GST liability, image, thanks to auto-population in GSTR-3B. This liability corresponds to the values in the Tax Comparison Report (TCR) for GSTR-1 and GSTR-3B. Again, for the reasons mentioned above, taxpayers may be perplexed when seeing GSTR-1 values greater than auto-populated data, and therefore GSTR-1 values are fictitious or mystical.

The Impact of GSTR-1 Amendments

GSTR-1 amendments are facilitated by various tables that correlate data from previously filed values and only consider gradual or decremental tax effects in TCR, which is magically reliable without having linked workings or information.

Though enabling modifications, the framework performs a lookup for data filed previously and then considers the net effect on current month liabilities. Regrettably, the corresponding original values are not available for comparison and review of effect on current month results in GSTR-1 or any other GST portal article. Only the taxpayer's internal workings will assist in responding to notifications while filing amendments in GSTR-1, as department officials disregard these spillover details that are part of TCR.

Please note that any amendment in GSTR-1 can be done only once.

Although these changes occur in GSTR-1 tiles of Taxable value and GST (revised), GST liability is only affected on a net basis (Net TV and Net GST). Both of these amendments will have an effect on liabilities listed in GSTR-1 for three financial years; for example, GSTR-1 for FY 20-21 includes details from FY 19-20 through September 2020, and amendments for FY 20-21 may be filed in GSTR-1 for FY 20-21.

As a result, without period-by-period segregation of GSTR-1 results, comparisons with GSTR-3B or even liability as per books are impossible. If GST officers have access to accurate and equivalent details, Notices for Discrepancies arising from the above-mentioned changes carried out in a corresponding FY can be avoided, saving time for both taxpayers and GST officers.

The Solution

Are you trying to work out ways to stop these reconciliations?

Hey! This write-up you shared nails the pain points around GSTR-1 amendments and the mismatch with GSTR-3B — a real headache for taxpayers and tax authorities alike.

Key issues:

GSTR-1 records outward supplies at invoice level with date stamping, while GSTR-3B captures aggregate tax liability for a month without period-wise detail.
Amendments in GSTR-1 can spill over across months or even financial years, but GSTR-3B reports don’t show this clearly.
This causes mismatches in tax comparison reports (TCR), triggering departmental notices and penalties.
The GST portal lacks period-wise breakdown and clarity in GSTR-1 summaries, making it tough for taxpayers to reconcile or defend differences.
Tax officers compare line-by-line GSTR-1 data with aggregate GSTR-3B data, which is fundamentally flawed.
Amendments are only allowed once, so careful planning is essential, but many taxpayers miss this and face litigation.
Overall, the system lacks transparency and ease for proper reconciliation.

Is this rational or practical?

No, it’s quite impractical. The mismatch is inherent due to design limitations, and the expectation that values match perfectly each period is unrealistic given the nature of amendments.

What can be done?

Better GST portal features:
The portal should:
- Provide period-wise detailed summaries in GSTR-1.
- Show impact of amendments clearly, including spillovers.
- Enable easier reconciliation tools linking GSTR-1 and GSTR-3B.
Educate taxpayers:
Taxpayers should maintain detailed internal reconciliation statements explaining:
- When amendments are done.
- Why differences occur.
- Supporting documents for corrections and spillovers.
GST department clarity:
Authorities should issue clear instructions or circulars acknowledging these mismatches and prescribing how to handle notices.
Advanced reconciliation software:
Use of third-party GST compliance tools that can:
- Track original filings vs. amendments.
- Provide detailed reports matching GSTR-1 and GSTR-3B data over multiple periods.

Bottom line:

Currently, amendments to GSTR-1 do create a gateway to litigation due to unavoidable mismatches with GSTR-3B, and taxpayers should be prepared with robust documentation and reconciliation reports when responding to notices.