How to Correct Errors in GSTR-3B After Filing: A Step-by-Step Guide

The Central Board of Indirect Taxes and Customs (CBIC) recently intensified its focus on GST compliance, issuing advisories that highlight the critical need for accurate GSTR-3B filings. This renewed emphasis comes as the government streamlines its digital infrastructure, making discrepancies in tax declarations more readily identifiable. Businesses across India are feeling the pressure to ensure their monthly returns are flawless.

This heightened scrutiny means that even small inaccuracies in your GSTR-3B can lead to notices or penalties, disrupting your business operations and financial planning. Understanding how to correctly address these mistakes after they happen isn’t just good practice; it’s essential for maintaining compliance and avoiding costly repercussions in India’s dynamic tax landscape.

What Is Gstr-3b?

GSTR-3B is a very important monthly return that every registered business under GST in India needs to file. Think of it as a sheet where you tell the tax department about your sales, purchases, and the tax you owe or can claim back. It’s a self-declared statement, meaning you’re responsible for making sure the information you enter is correct.

Monthly Return

This form isn’t as detailed as some other GST returns, like GSTR-1, which lists every single sale you make. Instead, GSTR-3B gives a summarised overview of your business activities for the month. You need to file it by the 20th or 22nd or 24th of the next month, depending on your state and turnover.

Key Information Included

When you file your GSTR-3B, you’re entering several crucial pieces of information:

• Outward Supplies: This is the total value of all your sales or services provided, and the tax you collected on them.
• Inward Supplies Liable to Reverse Charge: These are certain purchases where you, as the buyer, are responsible for paying the GST, not the seller.
• Eligible Input Tax Credit (ITC): This is the tax you’ve paid on your purchases that you can claim back. It reduces the amount of tax you need to pay on your sales.
• Tax Paid: This section shows how much tax you’ve paid using your ITC balance and any cash payments.

Importance Of Accuracy

Getting your GSTR-3B right is incredibly important. If you enter wrong figures, it can lead to various problems. You might end up paying too much tax, which affects your cash flow, or paying too little, which can lead to interest and penalties from the tax department. Accurate filing ensures you stay compliant and avoid unnecessary financial burdens.

Quick Context: GSTR-3B acts as the primary return for tax payment under GST. While GSTR-1 details your sales and GSTR-2B shows your eligible purchases, GSTR-3B consolidates this information to determine your final tax liability and allows you to actually pay your taxes.

Why Do Errors Happen In Gstr-3b?

Even with the best intentions, mistakes can creep into your GSTR-3B filing. It’s a common occurrence for businesses, big and small, across India. Understanding why these errors happen can help you be more careful in the future.

Wrong Sales Figures

Sometimes, businesses might accidentally enter incorrect total sales figures. This could be due to missing a few invoices, double-counting others, or simply making a mistake when adding up all the transactions for the month. If your sales figures are wrong, your output tax liability will also be incorrect.

Incorrect Purchase Details

Claiming Input Tax Credit (ITC) can be complex. Errors often occur when businesses forget to claim ITC on eligible purchases, claim ITC on ineligible items, or enter wrong amounts. It’s vital to ensure that the ITC you claim matches what’s available in your GSTR-2B, which is an auto-drafted statement of your purchase invoices.

Simple Typing Mistakes

Human error is a significant factor. A simple slip of a finger can change a ‘10,000’ to ‘1,000’ or ‘100,000’. These small typing mistakes can have a big impact on your tax calculations, leading to either underpayment or overpayment of GST.

Missing Important Data

In the rush to file, some businesses might miss entering certain transactions altogether. This could be a forgotten sale invoice, an ignored purchase bill, or even an oversight regarding supplies that fall under the reverse charge mechanism. Missing data directly affects the accuracy of your GSTR-3B.

Misunderstanding Tax Rules

GST laws can be intricate and they do change from time to time. Businesses might misunderstand certain tax rules, such as the correct HSN (Harmonised System of Nomenclature) or SAC (Services Accounting Code) for their goods or services, how to apply different tax rates, or which supplies are exempt. This misunderstanding often leads to incorrect tax calculations in GSTR-3B.

Imagine Mr. Sharma, a small electronics shop owner in Delhi- He recently sold a batch of washing machines. He mistakenly entered the HSN code for refrigerators instead of washing machines, which have a different GST rate. This simple error meant his reported output tax was slightly off, leading to a mismatch when the tax department later cross-checked his filings.

Can You Change A Filed Gstr-3b?

This is a crucial point that many businesses often get confused about. Once you’ve clicked that ‘File’ button for your GSTR-3B, you cannot directly go back and edit it.

No Direct Changes

Unlike some other tax forms you might have encountered, the GST system does not allow you to revise or amend a GSTR-3B once it has been filed. This means that if you spot an error right after filing, you can’t simply open the form and make corrections. The system is designed this way to ensure finality in monthly declarations.

Common Confusion: Many people think you can revise GSTR-3B like you might revise an income tax return. However, under GST, GSTR-3B does not have a revision option. Any corrections must be made in a specific way through subsequent filings.

Use Next Month’s Return

Since direct revisions aren’t possible, the GST system provides a mechanism to correct errors through your subsequent month’s GSTR-3B. This means that if you made a mistake in your July GSTR-3B, you’d correct it when you file your August GSTR-3B. This method requires careful adjustment to ensure everything balances out correctly over time.

How To Correct Errors In Your Gstr-3b

Correcting errors in GSTR-3B involves making adjustments in your next month’s return. The way you correct an error depends on what kind of mistake you made – whether it’s related to sales, purchases, or the tax you’ve paid.

Adjusting Sales (Output Tax)

Let’s say you made a mistake in reporting your sales, which affects your output tax (the tax you collect from customers).

• If you under-declared sales (paid less tax): This means you reported fewer sales than you actually made, so you paid less tax than you should have. To correct this, you need to declare the additional sales and the corresponding tax in the ‘Taxable Outward Supplies’ section of your next month’s GSTR-3B. You’ll then pay this extra tax, along with any interest that might apply for the delayed payment, when you file the current month’s return.
• If you over-declared sales (paid more tax): This means you reported more sales than you actually made, leading to you paying more tax. You cannot directly reduce your tax liability for the over-declared amount in the current month’s GSTR-3B. Instead, you would typically issue a credit note to your customer (if applicable) and report this credit note in your GSTR-1 filing for the relevant period. This adjustment in GSTR-1 will then reflect in your tax liability, potentially leading to a credit balance that can be used in future periods or claimed as a refund later.

Adjusting Purchases (Input Tax Credit)

Errors in claiming Input Tax Credit (ITC) are also common.

• If you under-claimed ITC (missed claiming eligible ITC): This means you didn’t claim all the tax you were eligible to claim on your purchases. To correct this, you can claim the missed ITC in the ‘Eligible ITC’ section of your next month’s GSTR-3B. Make sure that this ITC is genuinely available to you and is reflected in your GSTR-2B statement.
• If you over-claimed ITC (claimed ineligible or excess ITC): This means you claimed more ITC than you were entitled to. To correct this, you must reverse the excess ITC in the ‘Reversal of ITC’ section of your next month’s GSTR-3B. You’ll also need to pay back the excess claimed ITC, along with any applicable interest, as this is considered an underpayment of tax.

Consider Mr. Kumar from Bengaluru. He realised that he forgot to claim ITC for a large purchase of raw materials he made in July when he filed his July GSTR-3B. Since he cannot revise the July return, he will claim this missed ITC in his August GSTR-3B filing, ensuring it shows up in his GSTR-2B for July.

Correcting Tax Paid

If you made an error in your sales or purchase figures, it will naturally affect the final tax amount you paid.

• If you underpaid tax: After making adjustments for under-declared sales or over-claimed ITC in the next month’s GSTR-3B, you will need to pay the additional tax amount. This will typically be done through your electronic cash ledger, and interest under Section 50 of the CGST Act will also be applicable from the original due date of payment.
• If you overpaid tax: If your adjustments (like over-declared sales or under-claimed ITC) result in a higher ITC balance or a cash ledger balance, this amount typically remains as a credit. You can use this credit to offset future tax liabilities. If you wish to get a refund for this excess amount, you would need to follow the specific refund procedures under GST law.

For Old Financial Years

There are strict time limits for making corrections, especially when it comes to claiming ITC. Generally, you cannot claim ITC for an invoice after:

• The due date for filing the GSTR-3B for September of the next financial year (e.g., for FY 2023-24, the last date would be for September 2024 return).
• The date of filing the annual return (GSTR-9) for that financial year.

Whichever of these dates comes earlier is the deadline. Missing these deadlines means you might permanently lose the opportunity to claim eligible ITC. For errors related to output tax, you can make adjustments as long as the tax period is open for assessment or until the annual return is filed.

Important Things To Remember

Correcting errors in GSTR-3B isn’t just about knowing where to enter the figures; it’s also about understanding the wider implications and best practices.

Time Limits Matter

As discussed, there are strict deadlines for making corrections, especially for claiming ITC. Missing these deadlines can lead to permanent loss of tax benefits or increased liabilities. Always be mindful of the financial year and the relevant due dates.

Interest And Penalties

If you underpay your tax liability due to errors, the tax department will charge you interest. Under Section 50 of the CGST Act, interest is typically 18% per annum on the amount of tax that was paid late. Additionally, if the error is significant or indicates a deliberate attempt to evade tax, penalties can also be imposed under Section 122 of the CGST Act, which can be substantial.

Keep Accurate Records

The foundation of accurate GST filing is meticulous record-keeping. Always maintain proper invoices, debit notes, credit notes, payment records, and bank statements. These documents serve as proof for all your declarations and claims, and you’ll need them if the tax authorities ever question your filings.

When To Seek Help

GST laws can be complex, and interpreting them correctly might sometimes require expert knowledge. If you’re unsure about how to correct a specific error, or if the error is significant and involves large sums, it’s always wise to consult a qualified tax professional, such as a Chartered Accountant or a GST practitioner. They can provide accurate guidance and help you navigate the correction process without further issues.

Pro Tip: Always reconcile your GSTR-3B with your GSTR-1 (for sales) and GSTR-2B (for purchases) before filing. This simple step can catch most common errors before they become a problem, saving you time, money, and stress.

How To Avoid Future Gstr-3b Errors

Prevention is always better than cure, especially when it comes to tax filings. By adopting some best practices, you can significantly reduce the chances of making errors in your GSTR-3B.

Double-Check Everything

Before you hit the ‘File’ button, take a moment to review all the figures you’ve entered. Cross-verify the totals with your internal accounting records, sales registers, and purchase ledgers. A thorough final check can catch simple typing mistakes or overlooked entries.

Match With Gstr-1, 2b

This is arguably one of the most critical steps. Your GSTR-3B should always align with your GSTR-1 (which details your outward supplies) and GSTR-2B (which shows your eligible ITC based on your suppliers’ filings). Any mismatch between these forms will be flagged by the GST system and could lead to notices. Regularly reconciling these forms helps maintain consistency and accuracy.

“Accuracy in GSTR-3B isn’t just about compliance; it’s about ensuring your business doesn’t overpay or underpay, protecting your working capital and avoiding future hassles.”

Stay Updated On Rules

GST laws are dynamic and can change frequently through notifications and circulars issued by the government. Make it a habit to stay informed about the latest amendments, changes in tax rates, or new compliance requirements. Subscribing to official GST updates or consulting with your tax advisor regularly can help you stay current.

Use Reliable Software

Many businesses in India use accounting or GST-compliant software to manage their finances and file returns. These software solutions can automate many processes, reduce manual data entry errors, and even help with reconciliation. Investing in reliable software can streamline your GST compliance efforts and significantly minimise the risk of errors. Always ensure your software is updated to reflect the latest GST rules.

Conclusion

Understanding How to Correct Errors in GSTR-3B After Filing: A Step-by-Step Guide can help you make informed decisions. By following the guidelines outlined above, you can navigate this topic confidently.