GSTR 3: Return Filing, Format, Eligibility & Rules

GSTR-3 is the summary of GSTR-1 and GSTR-2 i.e. GSTR-3 contains information on sales and purchases for the period.

What is GSTR-3

GSTR-3 shows the amount of GST liability of an individual for the relevant month. The individual must pay the tax and file the return.


Who requires to file GSTR-3?

GSTR-3 is filed by each registered person. Whether there are any transactions during the month or not but this return has to be filed by each person registered except the following:

  • Input Service Distributors
  • Persons liable to collect TCS
  • Composition Dealers
  • Non-resident taxable person
  • Persons liable to deduct TDS
  • Suppliers of Online Information and Database Access or Retrieval Services (OIDAR), who have to pay tax themselves as per Section 14 of the IGST Act

Am I required to file a return if there are no transactions?

Yes,it is mandatory to file GSTR-3, even if there are no transactions.


What are the preconditions of GSTR-3?

  • Taxpayer should be registered on GST.
  • Taxpayers who are required to file return through DSC, DSC should be there and other taxpayers should have aadhar return.
  • GSTR-1 and GSTR-2 should be filed for the tax period

Due date of GSTR-3

The basic due date for filing GSTR 3 is the 20th of next month for the current month. There are five days gap between GSTR 2 and GSTR 3 for filing so that rectifications can be done for any error or discrepancies.

In 22nd GST council meeting various regulations are announced. They are as follows:

  • The business entities with annual turnover up to 1.5 crores will submit quarterly return. They will pay taxes quarterly.
  • This switch over has happened from October 2017 cycle.

Details in GSTR-3

Various components of GSTR 3 are :

  • GSTR 3 includes the information of outward and inward supply which will be auto populated from GSTR 1 and GSTR 2.
  • In this return, information regarding Input Tax Credit ledger, Cash ledger and Liability ledger will be updated in real time. The details of ITC, payment of tax, IGST and cess will be auto updated in the return from debit entry in credit or cash ledger.
  • Taxpayer can claim excess of payment of tax as a refund for which there is a different field given in the return. One can also carry forward the excess ITC balance.

How to file GSTR 3?

GSTR 3 can be filed online on the GST Portal. The taxpayer has to follow various steps:

  • The taxpayer has to login to their GST portal account
  • Verify the auto-generated information from the GSTR 1 and GSTR 2
  • Edit and add other information
  • GSTR 3 return must be digitally signed by the authorised person mentioned on the GST account.

Format of GSTR-3

There are 15 head in GSTR-3 format that is prescribed by the government.

Each heading along with its details are as under:

  • GSTIN

    GSTIN is the unique number that is Goods and Services Tax Identification Number given to each registered taxpayer. Provisional id can also be used in place of GSTIN if you do not have a GSTIN.

  • Name of the taxpayer, Month, Year –

    Legal name of the taxpayer and trade is mentioned here. The relevant month and year for which the GSTR 3 is to be filed is also included.

    After these headings there are 2 parts of GSTR-3.
    Part A is auto-populated from GSTR-1, GSTR-1A & GSTR-2 and
    Part B is be filled manually.

    PART A which is auto generated includes

  • 3. Turnover

    This head includes the total turnover of all types of supplies. Total turnover will be divided as follows:

    1. 3a. Taxable Turnover [other than zero rated]: This type of turnover includes the normal sales to both registered and unregistered buyers.
    2. 3b. Zero rated supply on payment of tax: This type of turnover includes exports which are paid by paying IGST that is later reclaimed as refund.
    3. 3c. Zero rated supply without payment of tax: This type of turnover includes exports which are paid with bond or LUT.
    4. 3d. Deemed exports: This includes items sold to SEZ (the goods do not actually leave the country)
    5. 3e. Exempted: These are goods and services which are not applicable for GST.
    6. 3f. Nil Rated: These are goods/services which attract 0% GST.
    7. 3g. Non-GST supply: These are items like petrol, electricity which are outside the scope of GST.

    The format is as under:

    Taxable Turnover
  • 4. Outward supplies

    This head contains a summary of all your sales during the relevant month. The information will be reflected automatically from your GSTR-1.
    It is further bifurcated as:

    1. 4.1 Inter-State supplies (Net Supply for the month)

      This includes all inter-state sales with the following details-

    2. 4.1A. Taxable supplies (other than reverse charge and zero-rated supply) [Tax Rate Wise]:

      Total sales except those on which reverse charge applies and exports

    3. 4.1B. Supplies attracting reverse charge-tax payable by recipient of supply:

      These are sales for which your buyer will pay GST under reverse charge

    4. 4.1C. Zero rated supply made with payment of IGST:

      These are exports which are paid by paying IGST which is later reclaimed as refund.

    5. 4.1D. Out of the supplies mentioned at A, the value of supplies made through an e-commerce operator attracting TCS-[Rate wise]:

      This will contain the portion of sales made through e-commerce. Here the GSTIN of e-commerce operator will also be displayed.

    Note: Zero rated supplies made without payment of taxes, i.e., exports through bond or LUT will not be included here .
    Amendments of supplies originally made under reverse charge basis will not be included in Table 4.

    The format of this head is mentioned right:

    Inter-State supplies

    4.2 Intra-State supplies (Net supply for the month)
    This is similar to the heading inter sale. The only difference is this head will contain details of intra-state sales as well. The format of this head is as follows :

    Intra-State supplies

    4.3 Tax effect of amendments made in respect of outward supplies
    This head includes all the changes made in the sales invoice. If there are any changes in the amount it affects the ITC which has a direct impact on the tax payable to the Government. This may lead to excess or under payment of tax. This head helps to keep a track on the invoices which are changed and those which have an impact on the tax amount.

    The format is as follows:

    Tax effect of amendments made
  • 5. Inward supplies attracting reverse charge including import of services (Net of advance adjustments)

    As the name suggests this head contains all the purchases and supplies received during the month. This information is automatically generated from the details recorded under the GSTR-2. It further is bifurcated as:

    1. 5A. Inward supplies on which tax is payable on reverse charge basis:

      This includes your purchases where reverse charge is applicable for which you as the buyer will pay GST. It displays both inter-state as well as intra-state sales. Tax liability due to reverse charge is net of invoices, advances paid, debit/credit notes and adjustments of advances if any.

    2. 5B. Tax effect of amendments in respect of supplies attracting reverse charge:

      This contains the changes made to the purchases that attract reverse charge. If the amount is changed, the amount of ITC also changes which directly impacts the tax payable which may result in excess or under payment. This heading helps to keep track of invoices which are changed and its impact on the tax amount.

    The format of this head is :

    Inward supplies
  • 6. Input tax credit

    This head states ITC on inward taxable supplies which includes imports and ITC received from ISD that is net of debit or credit notes.

    Part I

    This head includes summary of ITC that is available during the month. ITC here is shown separately for:

    • Inputs– such as our raw materials
    • Input Services– such as consulting fees
    • Capital Goods– such as laptop

    ITC that is received from Input Service Distributor (ISD) is also displayed here. All ITC will be shown after adjusting debit or credit notes.

    Part II

    This part includes changes made to earlier month’s details and their impact on ITC.

    The format of 6th heading is :

    Example-Nylon-Moulding-Powder
  • 7. Addition and reduction of amount in output tax for mismatch and other reasons

    Any mismatches in ITC and tax liability when compared to the original returns are mentioned here. It also states any changes filed during the current month. This information will be reflected from GSTR-2. It includes:

    1. 7a. ITC claimed on mismatched or duplication of invoices or debit notes: In case if there is any mismatch of invoices, the ITC will be claimed as double. The excess ITC when claimed from duplicate purchase invoices will be reversed and added to the tax liability.
    2. 7b. Tax liability on mismatched credit notes: Details of incorrect credit notes will result in incorrect ITC. Any extra ITC claimed due to mismatch will be added to your tax liability.
    3. 7c. Reclaim on rectification of mismatched invoices/Debit Notes: In this case, mismatch leads to claiming lower ITC. this is opposite of (a). The individual is entitled to more ITC and thus the additional amount will be reduced from the output tax liability.
    4. 7d. Reclaim on rectification of mismatch credit note: (Reduce): This works the same as (c) and is opposite of (b), that is lower ITC has been claimed.
    5. 7e. Negative tax liability from previous tax periods: This is due to excess of tax paid during the previous months and will be adjusted and reduced from output tax liability of this month.
    6. 7f. Tax paid on advance in earlier tax periods and adjusted with tax on supplies made in the current tax period. This is the tax paid along with advance payments in earlier months for supplies that are received during this month.
    7. 7g. Input Tax credit reversal/reclaim: This refers to ITC being reversed or reclaimed due to any other reason.
    Addition and reduction
  • 8. Total tax liability

    This is the most important portion as GST Portal will calculate the total tax liability here under different tax heads such as CGST, SGST & IGST

    It will show the following breakup:

    1. 8A. On outward supplies: This is tax payable on the normal sales of the business including inter-state sales.
    2. 8B. On inward supplies under reverse charge: This is the tax payable on the purchases that attracts reverse charge.
    3. 8C. On account of ITC reversal or reclaim: This is the changes that is additional tax payable or reduction which is available due to ITC reversal or reclaim. The information reflects from Table 11 of GSTR-2.
    4. 8D. On account of mismatch/ rectification /other reasons: This will include tax liability due to any other reason.

    The format is given below:

    Total tax liability
  • 9. Credit of TDS and TCS This head includes the details of Tax Deduction at Source (TDS) and Tax Collected at Source (TCS) paid by the taxpayer. The amounts of TD or /TCS will be deducted from the total liability to arrive at net tax amount that is payable.

    The format for this head is:

    Credit of TDS and TCS
  • 10. Interest liability (Interest as on ..)

    Any delay of payment fetch interest to be paid by the taxpayer. This interest is calculated at the rate of 18% per annum. It is calculated by the taxpayer on the total outstanding tax amount to be paid. The time period for this will be from the next day of filing that is the 20th of the month to the date of payment.
    This head shows the amount of interest applicable and the reason of applicability of the interest. Breakup into CGST, SGST, IGST & Cess will be given.

    1. Output liability on mismatch:

      If your tax liability has increased due to change in sales invoice and you have to pay interest on the increased amount.

    2. ITC claimed on mismatch invoice:

      If your tax liability has increased due to a change in purchase invoice and you have claimed an ITC on such invoice. You have to pay interest on the increased amount.

    3. On account of other ITC reversal:

      If your ITC claimed was reversed that has increased your tax liability then interest is payable by you.

    4. Undue excess claims or excess reduction [refer sec 50(3)]:

      If you have claimed extra ITC then you are required to pay interest.

    5. Credit of interest on rectification of mismatch:

      if you had paid interest on mismatch and now the interest is reversed or credited back.

    6. Interest liability carry forward:

      If you had an interest liability which you have paid partly, then the balance amount will be carried forward.

    7. Delay in payment of tax:

      This is due to late payment or late filing of return.

    8. Total interest liability:

      Finally, this shows the total interest payable under CGST, SGST & IGST.

    The format for this head is as under:

    Interest liability
  • 11. Late Fee

    A late fee as a penalty is also applicable along with interest if there is a delay in return filing. Late fee is Rs. 100 per day. The maximum amount as penalty is Rs. 5,000.

    This will be displayed as :

    Late Fee

    Note: There is no late fee for IGST.

  • 12. Part B which is filled up by the taxpayer manually includes

    The individual has to fill up the appropriate columns with the appropriate amounts.

    For example, if Mr X has a tax liability of Rs. 50,000 and ITC of Rs. 20,000, you can opt to pay Rs. 40,000 in cash (fill up column 3) and Rs. 20,000 through ITC (fill up the appropriate columns under 4,5,6).

    Remember to follow the ITC claim rules.

    The format is mentioned below:

    tax-payable-and-paid
  • 13. Interest, Late Fee and any other amount (other than tax) payable and paid

    Here, one has to fill the amount payable and the amount paid as interest or late fee with the breakup of tax heads. Note: There is no late fee for IGST.

    The format for this head is as follows:

    Interest, Late Fee and any other amount
  • 14. Refund claimed from Electronic cash ledger

    If the tax paid is higher than the actual amount that is to be paid by the individual, then the difference will be refunded to him or her.
    Note:
    14a. Refund from cash ledger can only be claimed only when all return related liabilities for the month have been discharged.
    14b. Refund claimed Table 14 will result in a debit entry in electronic cash ledger on filing of valid GSTR 3.

    The format below is showing how to fill this head:

    Refund claimed from Electronic
  • 15. Debit entries in electronic cash/Credit ledger for tax/interest payment [to be populated after payment of tax and submissions of return]

    This head will be filled automatically when the taxpayer will pay taxes and submit his or her returns.

    The format is :

    Debit entries in electronic cash
  • Final is the sign off with a declaration that all information that has been supplied and is correct.

    The verification can be done in this format:

    The format is :

    verification

How to confirm return is filed?

When the return is filed by the registered taxpayer, an ARN will be generated and SMS and email will be sent on the successful filing of GSTR-3. If the return is invalid, a mail and SMS will be sent to confirm the same. In that case, you have to pay unpaid liability, and then ARN will be generated confirming the same. After successful filing of return electronic ledgers will be updated


What happens if GSTR-3 is not filed?

When GSTR-3 return is not filed by the individual then the GSTR-1 return next month cannot be filed by him or her. This will result in late filing of GST return that will lead to heavy fines and penalties.


What happens in late filing of GSTR-3 ?

If the individual delays in filing GSTR 3 , he or she will be liable to pay interest and a late fee as penalty.
This interest is calculated by the taxpayer on the total outstanding amount of tax that is to be paid @18% p.a. starting from next day after the due date
The late fee is charged at Rs. 100 per day as per Act under CGST as well as under SGST. So total will be Rs. 200 per day. No late fee is charged for IGST.
The maximum late fee can be Rs 5000.


Revision of GSTR-3

If GSTR-3 is once filed, it cannot be revised. Any mistake that needs to be revised can only be done in the next month’s GSTR-1 and GSTR-2 returns. GSTR 3 is auto generated without the provisions of editing. Thus direct revision is not possible in GSTR-3.


Reconciliation of GSTR-3 and GSTR-3B

On filing the GSTR 3, if there will be any difference of liabilities between the actual and that is declared in GSTR 3B, the system will automatically update the details of GSTR 3 and GSTR 3B. If in this case, actual liabilities that are declared in GSTR-3 are higher than those declared and paid with GSTR-3B, the taxpayer has to pay the extra amount tax along with interest on the difference amount.


Conclusion

To show the monthly liability of GST for the taxpayers GSTR 3 is filed. This return is to be filed by all the registered entities. This return is filed on a monthly basis in general except the business entities whose turnover is upto 1.5 crores. They can file this return on a quarterly basis. The major use of this return is it shows the complete GST liability of the taxpayers who are registered for GST.


Frequently Asked Questions

Q- Why is filing of GSTR 3 is important?

As GSTR 3 shows the complete GST liability of a taxpayer this return is very important for the registered individuals.


Q- When an NRI is required to file GSTR-3?

NRIs who intent to transact in local supplies and also to avail ITC, then they are required to file GSTR-3 like every other registered payer.


Q- How to know GSTR-3 filed is a valid return?

To make your GSTR 3 a valid return, it should be filed only after paying the entire tax liability. Otherwise it will not be a valid return. If you file an invalid return and later wants to pay the remaining amount of tax liability, you have to file Part B of GSTR 3 again.


CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2Win.in. Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.