GSTR-3B is commonly termed as the monthly summary return filed by a taxpayer and discloses supplies made during the month along with GST to be paid, ITC claimed etc., and also makes a provision for tax payment(if any) for the relevant month.
GSTR-1 is a monthly or you can say quarterly return filed by taxpayers to disclose details of their supplies which are outward for the month along with their tax liability. Refund of IGST paid on Goods exported is the easiest & uncomplicated form of Refund Application.
Refund on Account of Zero-Rated Supply
Zero rated supply means that any of the following supplies of goods or services or both: –
- Export of goods or export of services or both
- Supply of goods or services or both to a SEZ (Special Economic Zone) developer or a SEZ unit.
Because of zero rating of supplies, the supplier has authority to claim input tax credit in respect of goods or services, or both used for such supplies.
Anyone who making claim of refund on account of zero-rated supplies has these options : –
1. Export under Bond/ LUT and claim refund of accumulated ITC.
2. Export on payment of integrated tax and claim refund thereof according to the provisions of CGST Act, 2017- section 54.
Reasons of mismatches in GSTR 1 and GSTR 3B
1. Difference in the sales amounts
The date of filling these forms are different and it is common for businesses that the actual sales at the time of filing GSTR 3B and GSTR 1 are different amount. As a resultant, it can be a reason for higher GST liability if sales as per GSTR 1 are higher than those as per GSTR 3B. Ultimately headed for a delayed payment of taxes and an interest liability for late payment.
2. Change in the calculation of liability
There is a chance that the calculation of taxes contains error due to wrong values of sales in one of the forms where there is a mismatch in GSTR 1 and 3B.
3. Difference in tax liability
This is a frequent and common case with credit-debit notes coming in picture and thus the tax liability changing due to the difference in sales amounts. As a result, it may cause for mismatch between the GSTR 1 and 3B forms and require reconciling.
Impact of mismatches in GSTR 3B
1. Wrong calculation of GST liability
The tax liability of the month will be miscalculated and thus there is a chance for excess or short payment of taxes.
Short payment can be a reason for late payment fees or interest to be paid on the GST for that month.
2. Rejection of ITC claims
ITC claims can get rejected because the sales figures are not matching in both forms and thus ITC claimed is wrong.
3. Notices from GST department
Due to short payment of taxes or erroneous ITC claims because of mismatch in invoices GST department may send you a notice.
Processing of Refund Application
The system referred by the Customs, after verifying that the goods covered by the said invoices have been exported out of India, will start to process the claim for refund & an amount equal to the integrated tax paid in respect of each shipping bill will be electronically credited to the bank account of the applicant mentioned in his/her registration particulars and as intimated to the Customs authorities.
Thus, Refund claim Requires accurate filing of: –
1. By Exporter- GSTR – 1
2. By Exporter- GSTR – 3B
3. By Shipping Company – Export General Manifesto
Reconciliation of GSTR-3B and GSTR-1
When you get these situations mentioned above, if any errors and differences are found in Form GSTR – 1 and GSTR -3B across months leading to any shortage of tax paid by the supplier, the same need to paid along with interest. Therefore, it essential necessary to conduct this reconciliation for every filing period to be assure that both the returns match, which would not give rise to any interest that may become payable later.