GSTR-3B vs GSTR 1 mismatch – Rule 88C perspective

GSTR-3B vs GSTR-1 mismatch is a commonly encountered issue by Indian small and medium business owners and startup founders while filing their GST returns. In this article, we will discuss this issue from the perspective of rule 88C.

Understanding GSTR-3B and GSTR-1

GSTR-3B is a monthly return filed by businesses to report their summary of inward and outward supplies, input tax credit claimed, and tax liability for a particular month. It is a self-declaration return and is usually filed by the 20th of the following month.

GSTR-1, on the other hand, is a detailed return filed by businesses to report their outward supplies made during a particular month. It includes the details of the invoice issued, the value of supplies made, and the applicable tax rate. It is filed by the 11th of the following month.

What is Rule 88C?

Rule 88C of the CGST Act, 2017, was introduced to resolve the mismatch between GSTR-3B and GSTR-1. According to this rule, if the details of outward supplies furnished by the supplier in GSTR-1 do not match with the details of supplies declared by the recipient in GSTR-3B, then the recipient can claim the ITC (input tax credit) only up to the extent of 10% of the eligible credit available in the GSTR-2A for the same period.

This means that if there is a mismatch between GSTR-1 and GSTR-3B, the recipient can claim only up to 10% of the ITC reflected in GSTR-2A for that particular period.

What is the reason for the mismatch?

The mismatch between GSTR-1 and GSTR-3B can occur due to various reasons such as:

Non-filing or delayed filing of GSTR-1 by the supplier.
Errors in the invoices uploaded by the supplier.
Non-updation of the GSTR-2A by the recipient.
Errors in the GSTR-3B filed by the recipient.

How can the mismatch be rectified?

The mismatch between GSTR-1 and GSTR-3B can be rectified by the following methods:

The supplier can rectify the errors in their GSTR-1 return and file a revised return.
The recipient can rectify the errors in their GSTR-3B return and file a revised return.
The recipient can communicate the mismatch to the supplier, and the supplier can rectify the errors and file a revised return.

Conclusion

GSTR-3B vs GSTR-1 mismatch is a common issue faced by Indian small and medium business owners and startup founders. Rule 88C of the CGST Act, 2017, provides a mechanism to resolve this issue. The mismatch can occur due to various reasons, and it can be rectified by filing revised returns or by communicating the issue to the supplier. It is important for businesses to file their GST returns on time and ensure that the details furnished in the returns are accurate to avoid any mismatch and claim the eligible ITC.