Correction/rectification/amendment of GST Returns (GSTR 3B & GSTR 1)

In the GST Regime we have seen several changes including the changes made under returns. GSTR-3B (i.e. a summary return) was brought for short period by the Government, while for detail of it FORM GSTR-1 and FORM GSTR-2 were also introduced. It was clarified that the system will automatically reconcile the data submitted in FORM GSTR-3B with FORM GSTR-1 and FORM GSTR-2, and the variations if any will either be offset against output tax liability or added to the output tax liability of the subsequent months of the registered person.

As per – section 37(3) of CGST Act, any registered person, who has furnished the details under section 37(1) for any tax period and which have remained unmatched under section 42 or section 43 of CGST Act, shall, upon discovery of any error or omission therein, rectify such error or omission in such manner as may be prescribed, and shall pay tax and interest, if any, in case there is short payment of tax on account of such error or omission, in return to be furnished for such tax period.

Provided that no rectification of error or omission in respect of the details furnished under section 37(1) of CGST Act shall be allowed after furnishing of the return under section 39 for the month of September following the end of the financial year to which such details pertain, or furnishing of the relevant annual return, whichever is earlier – first proviso to section 37(3) of CGST Act.

Department has issued a detailed circular No. 26/26/2017=GST dated 29-12-2017 giving instructions to correct errors made in filing GSTR-3B.

It is clarified that as return in FORM GSTR-3B do not contain provisions for reporting of differential figures for past month(s), the said figures may be reported on n et basis along with the values for current month itself in appropriate tables i.e. Table No. 3.1, 3.2, 4 and 5, as the case may be.

It may be noted that while making adjustment in the output tax liability or input tax credit, there can be no negative entries in the FORM GSTR-3B. The amount remaining for adjustment, if any, may be adjusted in the return(s) in FORM GSTR-3B of subsequent month(s) and, in cases where such adjustment is not feasible, refund may be claimed.

Where adjustments have been made in FORM GSTR-3B of multiple months, corresponding adjustments in FORM GSTR-1 should also preferably be made in the corresponding months.

• Mistakes in GSTR-3B:
• Common Errors Types in GST Returns:
  • • 1. Under-reporting of Tax Liability (Return filed)
    • 2. Over-reporting of Liabilities
    • 3. Wrong-reporting of Liabilities
    • 4. Under-reporting of ITC
    • 5. Over-reporting of ITC
    • 6. Wrong-reporting of ITC
    • 7. Cash Ledger wrongly reported ( Only Stage 2 effected)

    Mistakes in GSTR-3B:

    Filing of GSTR-3B return is a four step process – Stage 1 – Confirmed Submission, Stage 2 – Cash Ledger Updated. Stage 3 – Offset Liability, Stage 4 – Return filed. Before discussing about the errors, we must know the stage at which we want to correct or modify the data in GSTR 3B

    Stages	Process	Editing Option	Remarks for stage
    Stage 1	Submit	Available	At this stage tax liabilities and inputs are confirmed and submitted
    Stage 2	Cash Ledger	Available	Cash is added to the electronic cash ledger as per return liability
    Stage 3	Offset Liability	Not Available	All tax liabilities are adjusted with credit ledger and cash ledger.
    Stage 4	Filing of Return	Not Available	Return is filed finally.

    The return can be edited at Stage 1 and Stage 2 only. The return cannot be edited at stage 3 and stage 4.

    In that case, the adjustment can be made only in return of next month, as there is no provision to amend the GSTR-3B return after filing.

    Now if the errors are known before offsetting and filing then the same can be corrected by editing the respective liability side/input side etc. but on the other side if the errors are known after the offsetting and filing of return then in that case we need to do the following as the circular suggest :

    Common Errors Types in GST Returns:

    1. Under-reporting of Tax Liability (Return filed)
    

    • Liability may be added in the return of subsequent month(s) after payment of interest. (Suppose in a certain month some sale bill missed to be reported and due to this while adding this sales amount to current month sales, liability will also get increased. The said liability will have to be paid along with appropriate interest amount. Under GSTR 3B additional sales figure will be added in point no. 3.1 i.e. “Outward supplies and inward supplies on reverse charge”. Though in GSTR 3B where the said interest can be shown is not explained so only payment can be made.).
    • If such liability was not reported in FORM GSTR-1 of the month/quarter concerned, then such liability may be declared in the subsequent month’s/quarter’s FORM GSTR-1 in which payment was made. (The tax liability along with interest considered in GSTR 3B can be reconciled with GSTR 1 data).

    2. Over-reporting of Liabilities

    • Liability may be adjusted in return of subsequent month(s) or refund may be claimed where adjustment is not feasible. (Suppose if a bill was booked twice or some sales return transactions were missed to be considered then the same can be adjusted with the current month liability, if feasible otherwise refund can be claimed. Under GSTR 3B over reported sales figure will be deducted from the total sales figure (if feasible) from point no. 3.1 i.e. “Outward supplies and inward supplies on reverse charge”.). It may be noted that while making adjustment in the output tax liability or input tax credit, there can be no negative entries in the FORM GSTR-3B.
    • Where the liability was over reported in the month’s / quarter’s FORM GSTR-1 also, then such liability may be amended through amendments under Table 9 of FORM GSTR-1.

    3. Wrong-reporting of Liabilities

    • Unreported liability may be added in the next month’s return with interest, if applicable. Also, adjustment may be made in return of subsequent month(s) or refund may be claimed where adjustment is not feasible. (Suppose interstate liability was shown as intrastate liability or liability was shown with low tax rate. Then said interstate liability or the balance tax liability has to be paid and earlier paid intrastate tax can be adjusted later or can for claimed as refund.).
    • Such taxpayers will have to file for amendments by filling Table 9 of the subsequent month’s / quarter’s FORM GSTR-1.

    4. Under-reporting of ITC

    • Input tax credit which was not reported may be availed while filing return for subsequent month(s). (Suppose we have missed to consider certain purchases then we can consider the same in subsequent months purchase along with input tax credit available. Under GSTR 3B in point no. 4 i.e. “Eligible ITC” Additional ITC can be added. No, need for any action in GSTR 2 &3 as the same is not effective currently.).
    • No action required in GSTR-1.

    5. Over-reporting of ITC

    • Pay (through cash) / Reverse such over reported input tax credit with interest in return of subsequent month (s). (Suppose if we have claimed more input tax credit and also utilized then we need to adjust or pay the same along with the applicable interest amount.)
    • No action required in GSTR-1.

    6. Wrong-reporting of ITC

    • Pay (through cash) / Reverse any wrongly reported input tax credit in return of subsequent month(s).
    • For under reportedinput tax credit, the same may be availed in return of subsequent month(s).
    • No action required in GSTR-1.

    7. Cash Ledger wrongly reported ( Only Stage 2 effected)

    • Add cash under the right tax head and seek cash refund of the cash added under the wrong tax head. (Suppose if we have deposited IGST into wrong head (i.e. CGST head and SGST head) then we have to deposit CGST and SGST and we can adjust the surplus IGST with future liability or can claim refund.)
    • No action required in GSTR-1

    (Republished with Amendments. Amendments been made by CA Anita Bhadra)