Last updated: November 10th, 2022 3:51 PM

GSTR-1 Filing Facility will be Blocked for Non-filing of GSTR-3B Returns

Recently, the Goods and Services Tax Network (i.e., GSTN) has introduced a new feature namely ‘Blocking of GSTR-1 if GSTR-3B is not filed for the preceding month’. This new functionality will be implemented on the GST Portal shortly, after which the system will check the filing of preceding GSTR-3B before permitting to file GSTR-1 for the subsequent month. Blocking of GSTR-1 filing has been notified by adding a sub-rule (6) under Rule 59 of the CGST Rules. The Central Board of Indirect Taxes and Customs (CBIC) vide the Central Goods and Services Tax (Eighth Amendment) Rules, 2021 announced that if a taxpayer fails to file GSTR-3B for the preceding month, such a taxpayer will not be allowed to file the GSTR-1 for the subsequent month. For more details on Central Goods and Services Tax (Eighth Amendment) Rules, 2021, Click here

Rule 59(6) of Central Goods and Service Tax Rules

According to Rule 59(6) of the Central Goods and Service Tax Rules, if a registered taxpayer fails to file the return in GSTR-3B for the preceding month then he would not be allowed to provide the details of outward supplies of goods or services or both in GSTR-1.

GSTR-1

GSTR-1 is a type of GST return that needs to be filed by all normally registered taxpayers on a monthly or quarterly basis. GSTR-1 contains all the information related to the sale of goods or/and services.

FORM GSTR-3B

GSTR-3B is a type of GST return that contains all the information related to inward and outward supplies. GSTR-3B needs to be filed by all the normal registered taxable persons monthly or quarterly basis.

GSTR-1 Filing Facility will be Blocked for Non-filing of GSTR-3B Returns

From 1st January 2022, the GSTR-1 return filing facility will be blocked for Non-filing of GSTR-3B Returns for the previous return period. It was originally planned for September 2021, but with the 45th GST Council Meeting, the implementation of the rule is postponed to 1st January 2022.  The rule also includes blocking of invoice furnishing facility (IFF) on the portal for businesses who have opted QRMP scheme. The return blocking rule intends to ensure that GST returns are filed on time and there is no delay in the filing process. This rule is in continuation of the blocking of an e-way bill generation facility, effective from 15th August 2021.

Compulsory filing of the GSTR-3B

From 01 January 2022, a Registered person shall not be allowed to furnish FORM GSTR-1 or Invoice Furnishing Facility under GST (IFF), if he has not furnished the following forms:

• FORM GSTR-3B for the preceding month
• If he has not furnished FORM GSTR-3B for the preceding quarter (QRMP).

Blocking of GSTR-1 return filing facility

From 1^st January 2022, the GSTR-1 return filing facility will be blocked if the taxpayer has not submitted the return in FORM GSTR-3B for the previous return period. In simple words, starting from 1st January 2022, taxpayers will not be able to file GSTR-1 or use the IFF for December 2021 on the GST portal if they have pending GSTR-3B filing. This restriction applies to both monthly return filing as well as quarterly filing. If you are filing returns monthly, the last months would be considered. For example, if a taxpayer has not filed GSTR-3B for December 2021, the GSTR-1 filing facility will be blocked from the 1^{st of} January, 2022. In the case of quarterly returns, the previous quarter will be considered. Here, along with restrictions to file GSTR-1, even the invoice filing facility (IFF) would be blocked. For example, if the taxpayer has missed filing GSTR-3B for the July-September quarter, the above-mentioned facility will be blocked in the portal from the subsequent month, starting from January 2022.

Returns considered for blocking GSTR-1 filing facility

On implementation of the above rule, before the filing of GSTR-1/IFF for a tax period, the system will check whether the following has been filed or not:

• GSTR-3B for the previous monthly tax period (for monthly filers)
• GSTR-3B for the previous quarter (for quarterly filers)

Based on the status of the previous two returns, the system will restrict the filing of GSTR-1/IFF until the taxpayer complies with the rule.

Rule 59(6) Implementation on the GST portal

This functionality of ‘Blocking of GSTR-1 if GSTR-3B is not filed’ will be implemented on the GST Portal shortly, after which the system will check the filing of preceding GSTR-3B before permitting to file GSTR-1 for the subsequent month. A taxpayer has not filed the monthly GSTR-3B for November 2021. Now, the taxpayer tries to file GSTR-1 for December 2021 on 10th January 2022. The system will not allow the filing of GSTR-1 for December 2021 and will allow the filing of GSTR-1 for December 2021 only after the filing of GSTR-3B for November 2021.

How does blocking of the GSTR-1 rule work?

Once the new rule of blocking the GSTR-1 facility is implemented, the portal will have an additional check to verify the status of the previous return. This check will operate on clicking the ‘SUBMIT’ button of GSTR-1 and the system will give an error message if returns for the previous tax periods are not filed. Since the system checks and restricts filing after clicking submit button, the details/records which have been entered in GSTR-1 will remain saved. Once you have complied with the above rule, you can use the same details and submit the return. This rule works similar to blocking & unblocking of the e-way bill facility. The blocking and unblocking are completely automated. The portal will automatically block the facility if GSTR-3B is not filed for two previous return periods. In the same way, it will restore the facility as soon you comply with the provision i.e., after filing of GSTR-3B for the relevant tax period. No separate approval would be needed from the tax officer to restore the facility. In the advisory issued on the portal, the government recommends taxpayers who have not filed their pending GSTR-3B may do so at the earliest to ensure no disruption in filing GSTR-1/IFF.