Sequential Filing of GSTR-1

The Goods and Services Tax Network (GSTN) has introduced an Advisory on the Sequential Filing of GSTR-1. This advisory brings a structured approach to filing GSTR-1 returns, impacting monthly and quarterly filers. By emphasizing the sequential filing of returns and establishing a mandatory order between GSTR-1 and GSTR-3B filings, the advisory aims to streamline the GST return filing process. In this article, we delve into the details of this advisory on the Sequential Filing of GSTR-1. [shortcode_14]

Synopsis of Advisory on GST Sequential Filing

The advisory on Sequential Filing of GSTR-1 mandates a sequential approach to Goods and Services Tax (GST) return submissions.
GSTN requires filing GSTR-1 before GSTR-3B for a specific tax period.
It is applicable to monthly and quarterly filers and ensures an organized and compliant GST return process, effective October 2022.

What is GSTR-1?

GSTR-1 is a mandatory monthly or quarterly return for businesses registered under GST. This return includes comprehensive details of all outward supplies of goods and services conducted by the business in the specified period. Information such as invoice number, invoice date, customer details (name and address), HSN code of goods or services, and the taxable value with the corresponding tax amount is provided in GSTR-1. For monthly filers, GSTR-1 must be filed by the 11th of the succeeding month, while quarterly filers have until the 13th of the following month to file. For instance, if the relevant period is January 2024, monthly filers need to submit GSTR-1 by February 11, 2024, while quarterly filers have until February 13, 2024. [shortcode_14]

What is GSTR-3B?

GSTR-3B is a monthly (or quarterly for the QRMP scheme) self-declared summary GST return. In GSTR-3B, taxpayers provide summarized details of their sales, Input Tax Credit (ITC) claimed, and net tax payable. Key Points:

A separate GSTR-3B is required for each GSTIN (Goods and Services Tax Identification Number).
The GST liability must be settled on or before the filing date of GSTR-3B, which is earlier than its due date.
Once filed, GSTR-3B cannot be revised, emphasizing the importance of accurate reporting during the initial submission.
Even in instances of zero liability, filing GSTR-3B is mandatory for all eligible taxpayers.

What is Sequential Filing?

Sequential filing refers to filing returns in a Sequential order, from the oldest to the latest. For instance, if a business is required to file GSTR-1 for the period spanning October 2023 to January 2024, the filing sequence would be as follows:

GSTR-1 for October 2023
GSTR-1 for November 2023
GSTR-1 for December 2023
GSTR-1 for January 2024

This sequential filing approach ensures that businesses submit their returns systematically, minimizing the likelihood of errors and confusion.

Advisory on Sequential Filing of GSTR-1

On October 21, 2022, the Goods and Services Tax Network (GSTN) issued an advisory on the GST Portal, emphasizing the importance of the sequential filing of GSTR-1 and submitting GSTR-1 before GSTR-3B. The Central Government, through Notification No. 18/2022-Central Tax dated September 28, 2022, amended Sections 37 and 39 of the Central Goods & Services Tax Act (CGST), 2017, effective October 1, 2022. As per the revised Section 37(4) of the CGST Act, a taxpayer must file GSTR-1 before filing GSTR-3B for the same tax period. Failure to file the prior GSTR-1 may restrict the taxpayer from submitting GSTR-3B.

Section 37(4) & 39(10) of Central Goods & Service Tax Act, 2017

Amendments to Sections 37(4) and 39(10) of the Central Goods & Services Tax Act, 2017

Section 37(4):

Section 37(4) of the Central Goods & Services Tax Act specifies that a registered individual cannot submit details of outward supplies (GSTR-1) if they haven't submitted the same return for previous tax periods. In simpler terms, filing GSTR-1 for the current period is contingent upon having filed GSTR-1 for the preceding month or quarter.

Section 39(10):

In parallel, Section 39(10) of the Central GST Act states that a registered person is not allowed to submit a return (GSTR-3B) for a specific tax period unless they have filed the same return for any earlier tax periods or the details of outward supplies (GSTR-1) for the corresponding tax period. In simpler terms, filing GSTR-3B for the current period is subject to having filed GSTR-3B for the previous month or quarter or GSTR-1 for the same period. These changes will be implemented gradually and made accessible on the GST Portal starting November 1, 2022. Consequently, starting with the October 2022 tax period, it is essential to file the GSTR-1 for the previous period before filing the GSTR-1 for the current period.

Changes in Filing Sequence on GST Portal: GSTR-1 and GSTR-3B

Sequential Filing of GSTR-1

A registered person must now furnish the details of outward supplies under sub-section (1) for a tax period sequentially.
Filing GSTR-1 for the current tax period depends on the filing of GSTR-1 for the previous tax periods.

Mandatory Precedence for GSTR-3B

A taxpayer cannot file GSTR-3B for a specific tax period if GSTR-1 has not been filed for the same tax period.

India's Goods and Services Tax (GST) compliance process involves the sequential filing of GSTR-1 and GSTR-3B for registered taxpayers.
GSTR-1, a monthly or quarterly return, outlines the details of outward supplies. In contrast, GSTR-3B, a monthly summary return, provides an overview of the month's sales, purchases, and input tax credits (ITC).
By GST regulations, it is mandatory to complete the filing of GSTR-1 before initiating the filing of GSTR-3B.

GSTR 1 Filing Before GSTR-3B

This procedural requirement ensures that taxpayers submit their GSTR-1 return for the specific tax period before proceeding with the GSTR-3B return for the same period. This order is crucial because the information in the GSTR-1 return is automatically populated into certain fields of the GSTR-3B return, including total sales, available ITC, and tax liability. Accuracy and timeliness in filing the GSTR-1 return are essential to maintain precision in the information reflected in the GSTR-3B return.

Penalty for Failure to Sequence of filing GSTR-1 before GSTR-3B

Failure to adhere to the sequence of filing GSTR-1 before GSTR-3B may lead to penalties and interest charges. As per GST regulations, a late fee of INR 200 per day (up to a maximum of INR 5,000) is applicable for delayed GSTR-1 filings. Additionally, non-filing GSTR-1 for two consecutive tax periods may cancel the taxpayer's GST registration. To avoid penalties and ensure compliance, taxpayers must prioritize filing their GSTR-1 return before filing their GSTR-3B return. Timely and accurate submission is key to fulfilling GST obligations and avoiding financial repercussions. It's important to note that the requirement of filing GSTR-1 before GSTR-3B has been a longstanding practice under the prevailing GST laws in India.

Importance of Timely GSTR-1 Filing

Filing GSTR-1 on time holds significant importance for businesses under the GST framework.

Compliance Adherence: Timely filing of GSTR-1 ensures businesses comply with GST laws, avoiding penalties and legal consequences.
Input Tax Credit (ITC) Benefit: Prompt filing allows businesses to claim ITC efficiently, crediting taxes paid on inputs and preventing increased costs due to delays.
Accurate Record Keeping: Filing GSTR-1 on schedule helps businesses maintain accurate records of outward supplies, which is essential for proper accounting and reconciliation.

In conclusion, timely GSTR-1 filing is critical for compliance, maximizing ITC advantages, and ensuring accurate records of outward supplies.

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