Mismatch of GSTR-3B with GSTR-3

In our earlier blog, ‘Matching of GSTR-3B with GSTR-1, GSTR-2 and GSTR-3’ we discussed on how the GST system reconciles GSTR-3B with Forms GSTR-1, GSTR-2 and GSTR-3.In this blog, we will discuss about the impact of mismatch of GSTR-3B with GSTR-3 on businesses.
 
After matching GSTR-3B with GSTR-3, the outcome will result into any one of the following situation.

1. Tax paid as per GSTR-3B matches with tax payable in GSTR-3
2. Tax paid as per GSTR-3B is less than the tax payable in GSTR-3
3. ITC claimed in GSTR-3B is more than the eligible ITC in GSTR-2
4. ITC claimed in GSTR-3B is less than the eligible ITC in GSTR-2
5. Tax paid as per GSTR-3B is more than the tax payable in GSTR-3

We will explain each of the above mentioned situations and the impact of mismatch of GSTR-3B with GSTR-3 on businesses.

1.Tax paid as per GSTR-3B matches with tax payable in GSTR-3
In this situation, it is very clear that there is no difference between tax paid as per GSTR-3B and tax payable in GSTR-3. This also implies that the tax liability and eligible ITC declared in GSTR-3B completely matches with invoice-wise and rate-wise details furnished in GSTR-1 and GSTR-2. Thereby, you can sign and submit Form GSTR-3 without paying any additional amount as tax.

2. Tax paid as per GSTR-3B is less than the tax payable in GSTR-3
This situation occurs when the tax payable as per Form GSTR-3 is more than what has been paid as per GSTR-3B. This indicates that the tax liability declared in GSTR-3B is less than details furnished in your GSTR-1. In this case, the additional amount of tax (Difference of tax paid as per GSTR-3B and tax payable in GSTR-1) has to be paid by you along with an interest of maximum 18% by debiting the e-cash or credit ledger. Interest will levied from 26th August, 2017 till the date of debit in the e-cash or Credit ledger.  Only after this, the GSTN portal will allow you to submit the Form GSTR-3.

3. ITC Claimed in GSTR-3B is more than the eligible ITC in GSTR-2
This situation occurs when excess ITC is claimed and utilized in Form GSTR-3B compared to eligible ITC declared in Form GSTR-2. Hence, the excess ITC claimed by you will be added to output tax liability. The same needs to be paid along with interest which is capped at a maximum of 24% by debiting the e-credit or e-cash ledger. The transitional credit as per Form GST TRAN-1 credited to the electronic credit ledger can also be utilized for the payment of the additional tax liability.
Please note, only after discharging the additional tax payable, GSTN portal will allow you to submit the Form GSTR-3.

4. ITC claimed in GSTR-3B is less than the eligible ITC in GSTR-2
In this case, the ITC claimed and utilized in Form GSTR-3B is less when compared to the eligible ITC declared in Form GSTR-2.  Therefore, the differential amount of ITC will be credited to your e-credit ledger on submitting GSTR-3. Alternately, the above ITC can also be used for the payment of the increased output tax liability (as discussed in situations 2 and 3 above).

5. Tax paid as per GSTR-3B is more than the tax payable in GSTR-3
In this case, the output tax liability as per the details furnished in Forms GSTR-1 and GSTR-2 is less than the output tax liability furnished in GSTR-3B. The excess output tax liability will be carried forward to the next month and can be used to offset the output liability of the next month. This will get carried forwarded upon submission of GSTR-3.
Alternatively, the excess output tax liability paid by you, can also be utilized to adjust against additional tax payable (due to decrease in the eligible ITC). After adjustment, balance of excess output tax liability, if any, will be carried forward to the next month’s return.
We have discussed the possible situations that may arise due to mismatch between GSTR-3B and GSTR-3 and their impact.
What happens, if GSTR-3B is not submitted or full payment is not made? How will matching take place with GSTR-3? What would be the impact? Watch out our next blog.