Alert: Difference in GSTR-1 And GSTR-3B May Become Costly From New Year

The GST department is going to take strict action on those people who make mistakes in giving their tax information. GST authorities can take direct recovery action from January 1 against businesses that show excess sales in their monthly returns GSTR-1 but report under-reports while making tax payments in GSTR-3B.

Fake billing will be curbed

This step of the government will put a check on those who do fake billing. There is a complaint that sellers claim more input tax credit by showing more sales in GSTR-1, but showing less sales in their GSTR-3B to reduce their GST liability.

Under the GST law, till now such businesses, whose difference in GSTR-1 and GSTR-3B were found, were first issued show cause notices and only after that, in such cases of mismatch in GSTR-1 and GSTR-3B, recovery would be made.

Rule brought from Finance Act

The government brought this change as part of the Finance Act passed by Parliament earlier this year. The Central Board of Indirect Taxes and Customs (CBIC) notified it on December 21 by stating that on January 1, 2022, this provision will come into force under the GST law.

Through the Finance Act, the government has inserted an explanation in sub-section (12) of section 75 of the CGST Act, which specifies “self-assessed tax”.

AMRG & Associates senior partner Rajat Mohan said this is a “drastic provision” that gives the GST department exclusive powers to initiate tax collection proceedings.

It will now be mandatory for businesses that GSTR-3B and GSTR-1 match with each other and there should not be any difference irrespective of any reason.