How to File GSTR – 3B if Sales Return exceed Outward Supply?

A very Good day to all the readers. We have successfully completed 3 quarters of GST compliance and return filing (July’17 – Mar’18) and we must have experienced some or the other practical problems while doing so.

One of the practical issues among them is How to fill GSTR 3-B Form if the Sales return (Credit Notes issued) for any month is more than the actual Outward Supply for that month? Also what if, the ITC claimed for that month is less than the ITC to be reversed (on account of Purchase Returns i.e Debit Notes issued being more than actual Purchases (eligible for ITC) for that month?  These issues are most likely to occur in the month of March (i.e. year end) or April (i.e. year beginning).

While the GST Department and CBEC has not yet come out with clarification to these problems since the GSTR 3-B Form does not accept figures in the negative. Also the accounting software or ERPs like Tally, Busy, etc show the GSTR 3-B report in the normal general format i.e. Sales – Sales Return and ITC availed – ITC reversed. A screenshot of the same is as below to grasp a clear understanding of the issue. (see attachment – Tally data GSTR 3-B view)

tally-GSTR-3-B-data-view

 

To get the compliances and returns all right and on time, we first need to understand the purpose of Filing that GST Return. GSTR 3-B is a summary form for making adjustments and payments of GST liability and Input Tax Credit for the month. So we need to be extra – cautious in filling the GSTR 3-B Form so that the required Output Liability and the available Input Tax Credit is correctly reflected in the Electronic Credit Ledger.

This brings us to the doorway for solving the above referred problem (in italics & underlined above). While we understand that Sales is an outward supply and Sales Return is an inward supply. Similarly, Purchases are inward supply while Purchase Return is an outward supply. So to get the things right and GSTR 3-B correctly filled and filed, we will have to use this concept of inward and outward supplies.

We shall process the above sample data in the manner as per this table:

1. Outward Supplies

i. Sales – resulting in increase in Output Liability

ii. Purchase Return – resulting in increase in Output Liability (i.e. reduction in Input Tax Credit availed earlier)

2. Input Tax Credit

i. Purchases – resulting in increase in ITC

ii. Sales Return – resulting in increase in ITC (i.e. reduction in Output Liability)

The above screenshot of Tally data of GSTR 3-B can be put as per the above format, as shown below (in the attachment)

revised data for GSTR3-B

While this may seem out of the way, but the purpose of GSTR 3-B is correctly and aptly served while making no errors till the time CBEC or GST Department comes out with proper clarification or guidance note on the above issue. This shall result in overall correct treatment of GST Output Liability and Input Tax Credit availed. Also, there would be no deferment i.e. postponing of Credit and Debit Notes just to avoid negative figures.

After all, the experts have to make a way to deal with such business scenarios even if no guideline from the Government is available. That’s why they are called “Experts” and given the respect they deserve.

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30 responses to “GSTR 3-B: Practical Issues – Sales Return exceeding Sales”

  1. Ashish says:

    Hello Sir,
    My Total Purchase May’18 40,00,000 @ 18 %. My Total Sales 39,00,000 @ 18 %. My supplier Given credit note 3,00,000 @ 18 %. this credit note for incentive & scheme discount for customer. And this discount releted to invoice & date. so Please how to file GSTR-3B. Please Explain me

  2. Anuradha says:

    In case, agr 3b m jo sale, pur show ki h , agr vo
    Hmare actual sale s jyada chali jaye then
    In there any solution…….

  3. vishal suryan says:

    but the problem is that what turnover we have to mentioned in Tax audit report

  4. phani says:

    Nice Article and really a practical Problem.
    Another problem is… Exempted Turnovers. In this Case… One Month Companies(with Exempted Turnovers) have only sales.. next month Only Sales Returns. How to file 3B and 1 Returns…. There is no solution

  5. NISHANT ARORA says:

    In case of online dealer (on amazon & flipkart) all sales are Interstate & B2C hence need to fill table 3.2 in GSTR3B. But in one state (say GOA) sales return is more than sales which reduce aggregate net sales to be shown in table 3.1 (a). Now issue is how to show GOA in table 3.1 in negative figure?

  6. Sushant Yardi says:

    However what will happen if the credit note is towards wrong tax charging. In one of our case. tax was wrongly charged @ 28% instead of 18%. The credit note issued towards tax only but the tax credit note is more than that months tax liability. i don’t think there is any way out.

  7. CA Nikhil Jhanwar says:

    Well i believe, by considering Sales returns as Inward supply in 3B will face reconciliation issues while filing GSTR-1. Considering sales returns as inward supply is not correct in my view at the cost absence of clarification or updation from Government.

    • Chetaniraj says:

      I agree with you Mr. Nikhil.
      But i am talking of a case where sales return for the month exceed actual sales.
      What remedy can you suggest while filing GSTR 3-B??
      Your views and opinions are highly solicited.

  8. PRAVEEN BOTHRA says:

    1st article of Rajat is nice start. keep it up.

  9. k k Sarawagi says:

    Please inform remedy for correction of following inter-state purchase:
    The party sends trading material under provisional GSTIN No. in the beginning of the month of April. However, there is some change in the final GSTIN No. What course of action is now available to the purchaser so that ITC can be available against new GSTIN No.

  10. A Senthil,Tax Consultant says:

    Nice article sir. So for now, GST = confusion.

    • Chetaniraj says:

      Thank you Sir..! Very True that GST = Confusion since this is first year of its launch in India. Things will clarify as time passes and practical issues are raised by people like us to the department and other experts for clarifications and opinions

  11. priyakash35@gmail.com says:

    Nice article it is really felpful. Thank you GST Expert. ?

  12. PRIYA MISHRA says:

    Very nice article. Thank you GST EXPERT. ?

  13. Suresh Jain says:

    good suggestion til clarifications

  14. RAKESH KUMAR says:

    GSTR3B NEEDED TO BE CORRECTED TO ACCEPT FIGURES IN NEGATIVE AND SAME LIABILITY CAN BE OFFSET BY BALANCE IN ELECTRONIC CREDIT LEDGER. NEED TO DO IT URGENT WITH PROVISION TO REVISE EARLIER GSTR3B TOO.

    • Chetaniraj says:

      Definitely Rakesh! I agree with you. The CBEC has to come up with clarification on this issue and also update the relevant return forms to accept these. But till the time any step is taken by them, we can use this principle and file returns.
      Thank you for you r feedback!

  15. Vaddadi Saket says:

    Dear Rajat,
    It felt very nice to read the above article, the subject which you took is a major problem nowadays.

    However, the attachment in above article is missing and my question to you is how to deal with the situation, suppose outward supplies(Taxable Value) is more than the credit note(Taxable value) but the tax amount in Credit Note (CGST & SGST) is more than the total tax amount (CGST & SGST) in outward Supplies.

    For More clarity:

    Total Outward Supplies for the month:1000( Taxable value) 36 (IGST) 63 (CGST) 63 (SGST)

    Credit Note in the same month: 800(Taxable Value) 0 (IGST) 72 (CGST) 72 (SGST)

    I think the above example will help you to ascertain my question ( HOW TO SHOW THE ABOVE DETAILS WHILE FILING GSTR-3B)

    • Chetaniraj says:

      Dear Saket,

      While the issue raised by you is very similar to the one I faced with one of my clients in filing GSTR 3-B on the ITC part.
      In my case, ITC (purchase – purchase returns) showed a similar scenario as below:
      1. Taxable Value of Net Purchases was positive (i.e. Purchase value being higher than Purchase Returns Value)
      2. But the ITC tax part was – IGST: -ve and CGST & SGST was +ve.

      I used the concept and objective of filing GSTR 3-B for dealing with this issue.
      I added the Purchase Returns (Value & Tax both) in the Outward Supplies Table and added the Sales Return (Tax) in the ITC column since Value for inward supplies is not asked in the GSTR 3-B table.
      This led to correct treatment of taxes (output & Input). and thus the issue was resolved.
      The attachment isn’t showing in this article but i can mail it to you, if needed.
      You can reach out to me @ chetaniraj.rc@gmail.com

  16. Srinivas says:

    What about matching of turnover with the income tax return filed. Means turnover as per GST returns filed should match with the income return tobe filed. In the explanation given it is difficult to match both.

    • Chetaniraj says:

      Dear Srinivas,

      Good that you have taken up this issue.
      GSTR 3-B is a summary return for payment of output liability and claiming of ITC.
      While GSTR 1 is the return for filing sales data. Thus matching of Turnover would be with GSTR 1 instead of GSTR 3-B.
      Hope i could help!

  17. khushboo says:

    dear expert, i want to know that there is any type of certificate that can be used instead of issuing debit/credit note?

    • Chetaniraj says:

      Dear Khushboo,

      While the Law and the Accounts only recognise and record the Debit & Credit Notes, i doubt if any type of certificate can help in this matter.

  18. Mangesh Vasant Rajwade says:

    What you said is right we asked this question and also raised query number of times but no response i think it will be adjusted in GSTR-3. 3B also have following issue:-
    If we have to reverse Trans Credit of CGST the reversal amount in “other reversal” row also gets auto populated in SGST forcing to reverse SGST although no SGST credit taken

    • Chetaniraj says:

      Yes Mangesh,

      The Auto-populate is a tool to help and fasten the work. But it sometimes is not reasonable or correct. You can modify it by self.

      Thank you

  19. Hardeep says:

    Hello Sir,

    I have filed GSTR-3B for March.
    After matching Sale as per books & Sale as per Returns, I have found that my tax liability and have promptly paid it off.
    The amount paid is showing in my Electronic Ledger.
    The payment of difference amount of tax paid is lying there.
    My question is how to transfer the amount to GSTIN.

    Please suggest a remedy.

    • Chetaniraj says:

      Hello Hardeep,

      While GSTR 3-B cannot be rectified. The only way to show sales is to correctly file the GSTR 1 return.
      It’s good that you have already paid any excess liability due but since 3B can not be revised or rectified once it is filed, the only way out is GSTR 1.
      You could also raise a ticket on the GST Portal to be sure that no extra penalties are levied on you while the assessment takes place.

  20. Narasimhan says:

    Excellent advice. Really Expert Advice

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