Mistakes People makes in GSTR- 3B which may leads to wrong reporting in GSTR 9

After filling some Annual return GSTR 9, WE have found that, many people are making following 4 mistakes in day-to-day accounting. That leads to wrong reporting in GSTR 3B & then leads to wrong reporting in GSTR 9. Mind well, If you want to file GSTR 9 quickly then file GSTR 3B perfectly every month. This Basic 4 problems first need to be addressed & solved then only, You will have seamless & error free filling in GSTR 9. If GSTR 3B is error-free, Your GSTR 9 is Error-free & less time consuming

1. OUTWARD SIDE

1.1 Forgotten Incomes – Please Understand That Now Almost Every Income Is Under Radar Of Government and GST Department. Many People Commit Mistake By Not Charging GST On Following Incomes.

  1. Rent On Commercial Property,
  2. Freight Charged By Supplier On Goods Sold
  3. Commission Income.

If you have forgot to collect GST on these incomes in FY 17-18, 18-19, 19-20 THEN PLEASE PAY GST TO GOVT.

1.2 PURCHASE RETURN SHOWN AS SALES IN OUTWARD – You cannot show this in GSTR 3B as “SALES”. You have to reduce ITC in GSTR 3B. I have discussed this in detail in 4th point

2. RCM SIDE

Many people are not paying RCM. Reverse Charge GST is normally charged on following. You have to pay this in cash & you can claim ITC of RCM in majority case

(i) Transpiration / Freight ( Whether On Inward Or Outward )

(ii). Advocate Fees

(iii). Security Services

Please note that on all the above EXPENSES, You need to pay RCM to Govt… If you have forgot to pay GST under RCM on these EXPENSES in FY 17-18, 18-19, 19-20 THEN PLEASE PAY GST TO GOVT.

3. ITC SIDE –

3.1. If you have CLAIMED wrong ITC of “FMCG PE” ” FOOD & BEVERAGES | MOTOR CAR IF less THAN 13 PERSONS | construction | Goods Destroyed/lost | Personal Expenses | Exempted Goods Manufactured then you need to reverse it.

3.2. Sale return shown as Purchase & Thereby claiming wrongly ITC on it – You cannot show this in GSTR 3B as “INWARD”. You have to reduce sales in GSTR 3B. Discussed this in 4th Point

4. CREDIT NOTE / DEBIT NOTE

Biggest mistake, People are making that For Sale side credit note ( i.e sale side reduction/ sales return ), You have claimed it in Purchase & thereby claiming ITC. Instead of Reducing Sale side liability. Mind well, You are doing wrong.

What is right approach ?? In GST, Any sale side reduction, Seller should issue Credit Note & he should reduce his Outward Tax

LET’S make it clear that Only SUPPLIER ( I. E SELLER ) has to issue CREDIT NOTE / DEBIT NOTE when sales amount gets changed or sale return.

Credit note or Debit Note

GSTR-1 which you send, We are finding lot many mistakes in GSTR-1 particularly for Credit Note – Debit Note. Please feel free to ask me anytime to learn about CN-DN. Hereby, I am writing detailed explanation once again for Credit note / Debit Note.
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Firstly, keep in mind that only seller need to make Credit Note – debit note (& never Purchaser).Both Debit Note or Credit note need to be prepared only by Supplier (seller). (whenever there change (+/-) in Sales invoice).

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What is Debit Note?

A debit note in GST, is a document issued by the supplier in the following cases:

  •  Increase in Taxable Value -When a supplier requires to increase the taxable value of a supply, he/she has to issue debit note to the recipient.
  •  Increase in GST charged in invoice – When a supplier requires to increase the rate or value of GST charged in an invoice, he/she has to issue debit note to the recipient.

The issuance of a debit note or a supplementary invoice creates additional tax liability. The treatment of a debit note or a supplementary invoice would be identical to the treatment of a tax invoice as far as returns and payment are concerned.

in GSTR 3B, SALE SIDE ( OUTWARD SIDE ) LIABLITY WILL Increase

in GSTR 1, show this in CDNR sheet – as credit note – Type “D”

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What is Credit Note?

A credit note in GST, is a document issued by the supplier in the following cases:

  • Supplies are returned or found to be deficient by the recipient – When goods supplied are returned by the recipient or goods/services supplied are found to be deficient by the recipient, the supplier should issue a Credit Note. The credit note serves the purpose of reducing the value of the original supply.
  • Decrease in taxable value – When a supplier requires to decrease the taxable value of a supply, he/she has to issue a credit note to the recipient.
  • Decrease in GST charged in invoice – When a supplier requires to decrease the rate or value of GST charged in an invoice, he/she has to issue a credit note to the recipient.

in GSTR 3B, SALE SIDE ( OUTWARD SIDE ) LIABILITY WILL REDUCE

in GSTR 1, show this in CDNR sheet – as credit note – Type “C”

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You have to think Other way round, If you have made Purchases and thereafter any Price revision or Purchase Goods return happened.

For Purchase Decrease Or Goods Returned By You – Reduce ITC in GSTR 3B I.E Inward Side Effect….. (No Effect In GSTR 1)

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6 Comments

  1. RAVEE S says:

    Dear Sir Thanks for the article and I wish to know what is the RCM rate to be paid on Frt/Security Services/Advocate fees and which head has to be paid whether in CGST & SGST or IGST. How to determine.

  2. sreekumar says:

    KASH THIS ARTICLE CAME AT THE EARLY STAGE OF GST… I TOO FOUND MANY PPL DOING THIS MISTAKE. EVEN FOR SALES RELATED GOODS RETURN ( SOME BIG. COs LIKE ESR.. MEGNI ETC.. REJECTING THE GOODS FROM THEIR FACTORY GATE.. ) THE CLIENT JUST PREPARE A SINGLE SIDE CREDIT NOTE AND REDUCE THE SALES.. VERY BIG MISTAKE …. SUCH PPL R HEADING FOR A BIG TROUBLE

  3. brgsankar says:

    Is there is any time limit to issue Debit Note? For the GST Rate difference in the invoices of FY 2017-18, can I issue a debit note in FY 2019-20?

  4. brgsankar says:

    Is there is any time limit to issue Debit Note? For the GST Rate difference in the invoices of FY 2017-18, can I issue a debit note in FY 2018-19?

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