Arjun (Fictional Character): Krishna, what are the warnings which taxpayers can’t afford to ignore in GSTR-3B from November 2020 onwards?
Krishna (Fictional Character): Arjuna, there are four warnings that need to be critically taken care of in GSTR-3B from November 2020 onwards. First, in GSTR-1 and GSTR-3B about outward supplies in Table 3. Second, in GSTR-2B and GSTR-3B about RCM in table 3. Third, GSTR-2B and GSTR-3B about ITC in table 4 and fourth, GSTR 2B and GSTR-3B about the import of goods (ICEGATE) in ITC table 4. Let’s discuss these warnings in detail.
Arjun (Fictional Character): Krishna, what warning do GSTR-1 and GSTR-3B about outward supplies in Table 3 specify about?
Krishna (Fictional Character): Arjuna, the figures of outward taxable supplies in GSTR-1 which are filed by the taxpayer on or before the 10th of the succeeding month, are now auto-populated in GSTR-3B of the respective month, which gives a red flag for the taxpayers to check the data previously filled in GSTR-1. If the taxpayer changes the amount of outward taxable supplies, the system warns that the information entered by the taxpayer is in variance with the auto-populated data. The liability has been computed on the basis of information declared by the taxpayer in Form GSTR-1. Kindly recheck and proceed.
Arjuna, the figures of outward taxable supplies in GSTR-1 which are filed by the taxpayer on or before the 10th of the succeeding month, are now auto-populated in GSTR-3B of the respective month, which gives a red flag for the taxpayers to check the data previously filled in GSTR-1. If the taxpayer changes the amount of outward taxable supplies, the system warns that the information entered by the taxpayer is in variance with the auto-populated data. The liability has been computed on the basis of information declared by the taxpayer in Form GSTR-1. Kindly recheck and proceed.
Arjun (Fictional Character): Krishna, what warning do GSTR-2B and GSTR-3B about RCM in table 3 specify about?
Krishna (Fictional Character): Arjuna, after filing GSTR-1 by the supplier, the GSTR-2B statement is generated by the GSTN portal. The liability of RCM then gets auto-populated in the recipient’s GSTR-3B. Hence, the liability to pay tax under the RCM mechanism arises on the part of the recipient. When such a recipient calculates his own RCM liability and alters the figure of RCM in GSTR-3B, the system warns him about such alteration. The taxpayer has to pay keen attention to this warning, as later he has to take the ITC on payment of such RCM.
Arjun (Fictional Character): Krishna, what warning do GSTR-2B and GSTR-3B about ITC in table 4 specify about?
Krishna (Fictional Character): Arjuna, ITC in table no. 4 of GSTR-3B is the most important for taxpayers. Now, as GSTR-2B has come into the picture, the figures of ITC get auto-populated from therein into GSTR-3B. If the taxpayer alters the figure of such ITC in GSTR-3B, the system warns the taxpayer that ITC is not as per GSTR-2B. Rule 36(4) will be taken care of by the system in such cases. The system will auto calculate the margin of 10% in ITC, and disallow the ITC if it is in excess of 110%. Care should be taken to keep a record of the cumulative impact of section 36(4) of all past months, as GSTR-2B displays the data for the current month only.
Arjun (Fictional Character): Krishna, what does the warning of GSTR-2B and GSTR-3B about the import of goods (ICEGATE) in ITC table 4 specify about?
Krishna (Fictional Character): Arjuna, the figures of import of goods in ITC Available in table no. 4. is now auto-populated from the ICEGATE portal into GSTR-3B. Taxpayers first need to pay all the taxes, such as customs duties, IGST for importing the goods. As soon as the Customs department evaluates the shipping bill, the amount of ITC for IGST paid by the taxpayers, reflects in table no. 4 of GSTR-3B, so that he can avail of the ITC.
Arjun (Fictional Character): Krishna, considering these warnings, taxpayers may face issues in filing returns, how to resolve those issues?
Krishna (Fictional Character): Arjuna, as per the advisory issued, to resolve GSTR-1 warnings, taxpayers must file a correct and complete statement before the 11th of every month. Although the system allows the filing of GSTR-3B even if GSTR-1 of any month is not filed, the taxpayer needs to be prompt about his return filing. The altered figures if any, in GSTR-3B can be amended in next month’s GSTR-1. Further, for difficulties in RCM, taxpayers must prepare a reconciliation statement for RCM auto-populated in GSTR-3B as per GSTR-2B and as per taxpayer’s books. Reconciliations also need to be prepared for the figures of ITC in the import of goods, if it differs from the auto-populated data.
Arjun (Fictional Character): Krishna, what should the taxpayer learn to form this?
Krishna (Fictional Character): Arjuna, the major issue which taxpayers will face out of these warnings is, which method to consider for computation of ITC in GSTR-3B: As per books or as per 2B report, or combination of both. However, taxpayers may use any of the given methods, after considering the effects of each one, as one may lead to litigations from the GST department, and others may doubt the authentication of the report and mismatches.
Author Bio
Sir,
Please advise is there any provision to entrer Reverse Charges on inward Supplied i.e. GTA in GSTR-1 and where to enter the same.