Wrongly treating IGST sale as State Sale in GSTR 3B

Hi Abhinav,

This is a common issue where IGST sales are wrongly reported as intra-state sales attracting CGST & SGST instead of IGST.

Let me break down your concerns:

1. Nature of Mistake & Correction

• Your client filed GSTR-3B showing CGST = 9000 + SGST = 9000, but the sale was actually an IGST sale.

• The correct tax liability on Rs. 100,000 at 18% GST is IGST Rs. 18,000.

2. Using DRC-03 to Rectify

• Since the liability has been under-reported for IGST, your client will have to pay the balance IGST of Rs. 9,000 (18,000 IGST - 9,000 CGST already paid) along with interest.

• However, the CGST and SGST paid cannot be directly adjusted against IGST liability because these are different heads of tax.

• You cannot just ‘convert’ CGST/SGST paid into IGST paid under the current law.

3. Payment Process

• File DRC-03 to pay the balance IGST of Rs. 9,000 + applicable interest.

• The interest is calculated from the due date of filing of GSTR-3B (Nov 2020) till date of payment.

• CGST and SGST already paid remain as paid and cannot be adjusted or refunded unless you do an amendment/cancellation of original return (which is not allowed post due date).

4. Effect on ITC to the Buyer

• Since GSTR-1 correctly reported the sale as IGST, the buyer’s GSTR-2A will show IGST paid of Rs. 18,000.

• This means the buyer will get full ITC on IGST, as per original correct invoice.

• There is no impact on buyer’s ITC in this case.

Summary:

Additional Suggestion:

• Going forward, maintain a proper reconciliation between GSTR-1 and GSTR-3B.

• Inform your client about timely corrections.