If you're a small or medium business owner or a startup founder in India, you must be aware of Goods and Services Tax (GST). GST is a value-added tax levied on the supply of goods and services in India. Under GST, you need to file various returns, including GSTR-1 and GSTR-3B, to comply with the tax laws. In this article, we'll focus on the filing of GSTR-1 before GSTR-3B and why it's important.
GSTR-1 is a monthly or quarterly return that businesses need to file based on their turnover. It contains details of all the outward supplies of goods and services made by the business. GSTR-3B, on the other hand, is a summary return that businesses need to file every month. It contains details of the total sales, purchases, and tax liability of the business.
Now, let's explore why filing GSTR-1 before GSTR-3B is crucial for your business.
Here are some reasons why you should always file GSTR-1 before GSTR-3B:
If you fail to file GSTR-1 before the due date, you may have to pay a late fee of Rs. 200 per day (Rs. 100 for nil returns). Similarly, if you fail to file GSTR-3B before the due date, you may have to pay a late fee of Rs. 50 per day (Rs. 20 for nil returns). By filing GSTR-1 on time, you can avoid paying these fees and penalties.
When you file GSTR-1 before GSTR-3B, you can make sure that all the outward supplies are correctly reported in GSTR-1. This can help you reduce the risk of errors and mismatches in your returns, which can lead to more scrutiny from the tax authorities.
Input tax credit (ITC) is the tax paid on inputs used in the business. When you file GSTR-1 before GSTR-3B, you can claim correct ITC based on the details of the outward supplies mentioned in GSTR-1. This can help you reduce your tax liability and improve your cash flow.
Reconciliation is the process of matching the details of outward supplies in GSTR-1 and inward supplies in GSTR-2A (auto-populated return). By filing GSTR-1 before GSTR-3B, you can simplify this process and avoid any discrepancies in your returns.
GST is a complex tax regime, and it's important to file your returns on time and accurately to comply with the tax laws. By filing GSTR-1 before GSTR-3B, you can avoid late fees and penalties, reduce the risk of errors, claim correct input tax credit, and simplify the reconciliation process. So, make sure you file your GSTR-1 before GSTR-3B and stay compliant with the tax laws.
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