Higher sales in GSTR-1 and lower tax liability in GSTR-3B: A Complete Guide

GST has been one of the biggest reforms in the Indian tax system. It has replaced the complex web of indirect taxes levied by the central and state governments, making it easier for businesses to comply with tax regulations. The introduction of GST has also brought about many changes in the way businesses operate, including the way they file taxes.

In this article, we will discuss how businesses can achieve higher sales in GSTR-1 and lower tax liability in GSTR-3B. We will also discuss the differences between GSTR-1 and GSTR-3B and the importance of filing them correctly.

Understanding GSTR-1 and GSTR-3B

GSTR-1 is a monthly or quarterly return that businesses need to file to report their outward supplies or sales. It contains details about the goods or services sold, the amount of tax collected, and the tax liability. It needs to be filed by the 11th of the following month (for monthly filers) or the 31st of the following quarter (for quarterly filers).

GSTR-3B, on the other hand, is a monthly return that businesses need to file to report their tax liability. It contains details about the tax payable, the tax paid, and the input tax credit claimed. It needs to be filed by the 20th of the following month.

Importance of filing GSTR-1 and GSTR-3B correctly

Filing GSTR-1 and GSTR-3B correctly is crucial for several reasons:

Compliance: Filing GSTR-1 and GSTR-3B is a legal requirement. Non-compliance can attract penalties, interest, and even prosecution.
Input tax credit: The input tax credit claimed by businesses is based on the details mentioned in GSTR-1 and GSTR-3B. If these returns are filed incorrectly, it can lead to incorrect input tax credit claims, resulting in higher tax liability.
Cash flow: Filing GSTR-1 and GSTR-3B correctly can help businesses manage their cash flow better. It ensures that they do not end up paying more tax than they need to, which can impact their working capital.
Audit: The details mentioned in GSTR-1 and GSTR-3B are subject to audit. Filing them correctly can help businesses avoid any discrepancies in their tax filings and ensure smooth audits.

How to achieve higher sales in GSTR-1?

Businesses can achieve higher sales in GSTR-1 by following these tips:

Maintain accurate records: The details mentioned in GSTR-1 should match with the actual sales made by the business. To ensure this, businesses should maintain accurate records of their sales.
Include all sales: Businesses should include all sales made during the month/quarter in GSTR-1. Any sales that are not reported can lead to incorrect input tax credit claims and can result in higher tax liability.
Timely filing: GSTR-1 needs to be filed by the 11th of the following month (for monthly filers) or the 31st of the following quarter (for quarterly filers). Timely filing ensures that businesses do not miss out on reporting any sales made during the period.
Reconcile GSTR-1 with GSTR-3B: Businesses should reconcile the details mentioned in GSTR-1 with those mentioned in GSTR-3B to ensure that there are no discrepancies. This can help them avoid any penalties or interest.

How to lower tax liability in GSTR-3B?

Businesses can lower their tax liability in GSTR-3B by following these tips:

Claim input tax credit: Businesses can claim input tax credit on the taxes paid on goods or services purchased for business purposes. This can help them lower their tax liability.
File returns on time: Timely filing of GSTR-3B can help businesses manage their cash flow better. Late filing can attract penalties and interest, which can increase the tax liability.
Reconcile GSTR-3B with GSTR-2A: Businesses should reconcile the details mentioned in GSTR-3B with those mentioned in GSTR-2A (auto-populated return containing details of inward supplies). This can help them claim the correct input tax credit and lower their tax liability.
Review transactions: Businesses should review their transactions to ensure that they are not missing out on any input tax credit claims. This can help them lower their tax liability.

Conclusion

Filing GSTR-1 and GSTR-3B correctly is crucial for businesses to comply with tax regulations, manage their cash flow, and avoid penalties or interest. By following the tips mentioned in this article, businesses can achieve higher sales in GSTR-1 and lower their tax liability in GSTR-3B.