GST return filing and reconciliation

Law

Sections 37, 39, 44 and 47, CGST Act 2017

Monthly returns

GSTR-1 and GSTR-3B

Interest on late tax

18% a year

Return time bar

Three years from the due date

Which GST returns you file, and when

Due dates are sometimes extended by notification, usually when the portal has problems. We track every extension for you, but plan on the dates above.

Input tax credit: what you can claim and when

Input tax credit (ITC) is where most GST money is won or lost. Under Section 16 you can claim credit on purchases used for business only if all of these are true:

• You hold a valid tax invoice or debit note.
• The invoice appears in your GSTR-2B, the auto-drafted statement generated on the 14th of each month from your suppliers' GSTR-1 filings. Credit not in GSTR-2B cannot be claimed in GSTR-3B.
• You have received the goods or services, and the supplier has actually paid the tax to the government.
• You pay the supplier within 180 days of the invoice date, or the credit must be reversed until payment is made.

Credit is also time-barred. Under Section 16(4), ITC on an invoice for a financial year can be claimed only up to 30 November of the following year or the date of filing the annual return, whichever is earlier. Credit on blocked items under Section 17(5), such as most motor vehicles, food and beverages, club memberships and works contracts for immovable property, is never available.

Since October 2024 the Invoice Management System (IMS) lets you accept, reject or keep pending each invoice your suppliers upload before GSTR-2B is finalised. Rejecting a wrong invoice at this stage is far easier than reversing credit later.

Why monthly reconciliation matters

Most GST notices issued today come from automated comparisons, not from audits. The department matches:

• GSTR-1 liability against GSTR-3B liability for the same period;
• ITC claimed in GSTR-3B against ITC available in GSTR-2B;
• turnover in GST returns against turnover in the income tax return and e-way bills;
• your sales to registered buyers against the purchases they report.

Differences beyond set tolerances generate intimations in DRC-01B or DRC-01C, and if unexplained, a show cause notice under Section 73 or 74. Our monthly process reconciles your purchase register with GSTR-2B and your sales register with GSTR-1 before anything is filed, so differences are corrected in the same month. If a notice has already arrived, our GST litigation team prepares the reply.

Correcting mistakes and the locked GSTR-3B

The GST system now leaves less room to correct errors after filing. Tax liability in GSTR-3B is auto-populated from GSTR-1, and the GST Network has moved to make those auto-populated values non-editable in GSTR-3B. Corrections to sales are made instead by amending GSTR-1 through GSTR-1A before GSTR-3B is filed, or in a later period's GSTR-1.

• A filed GSTR-3B cannot be revised. Errors are corrected in the next return, within the Section 16(4) and Section 39(9) time limits.
• Returns cannot be filed once three years have passed from their due date. A business that falls far behind can lose the ability to regularise old periods.
• GSTR-3B for a period cannot be filed until GSTR-1 for that period is filed, and returns must be filed in sequence.

The practical lesson is to get the figures right before filing, which is why we reconcile first and file second.

Late fees, interest and what non-filing leads to

Late fee for GSTR-1 and GSTR-3B is ₹50 a day (₹25 CGST and ₹25 SGST), or ₹20 a day for a nil return, subject to a maximum that depends on your turnover. For GSTR-9 it is ₹200 a day, capped at a small percentage of turnover in the state. Late fee cannot be paid from input tax credit.

Interest at 18% a year runs on tax paid late, calculated on the net tax paid in cash. Interest on wrongly availed and utilised credit is charged under the same Section 50.

Continued non-filing has heavier consequences. E-way bill generation is blocked after two missed periods, your buyers lose credit because your invoices do not appear in their GSTR-2B, and the officer can cancel registration where returns have not been filed for a continuous period of six months, or where a composition dealer has not filed the annual return for more than three months after its due date. A cancellation also means your customers stop receiving credit for your invoices, which usually costs you customers before it costs you penalties. Restoring a cancelled GSTIN requires filing all pending returns with fees and interest first.

How our GST return filing service works

You share your sales and purchase data each month, from Tally, Busy, Zoho, an Excel register or scanned invoices. We prepare GSTR-1, reconcile purchases with GSTR-2B and IMS, compute the tax and ITC, and send you a one-page working with the amount payable before the due date. You pay the challan; we file and send you the acknowledgement.

Our fee is a fixed monthly or quarterly amount based on the number of invoices, the number of GSTINs and whether e-invoicing or e-way bills are involved. The annual return and reconciliation are quoted separately. For businesses that have fallen behind, we file the pending returns in order and tell you the late fee and interest upfront. If you are not yet registered, start with GST registration.

Documents you need

Each month or quarter we need the following. Most clients share them through a shared folder or accounting software access.

• Sales invoices or sales register with GSTIN of buyers
• Purchase invoices or purchase register
• Credit and debit notes issued and received
• Bank statement for the period
• E-invoice and e-way bill details, where applicable
• Details of expenses under reverse charge such as legal fees and freight
• GST portal login or authorisation to access it
• Previous returns and any notices received

How we handle it for you

1. Collect data

   Sales, purchases and expenses for the period are collected by the 5th of the month.

2. Reconcile

   Purchases are matched with GSTR-2B and IMS, and sales with e-invoices and e-way bills.

3. Share the working

   You receive the tax payable and ITC figures to approve before filing.

4. File

   GSTR-1 and GSTR-3B are filed on time and acknowledgements sent to you.

5. Close the year

   GSTR-9 and GSTR-9C are prepared from the reconciled monthly data.

Why clients choose ProudLegal

Frequently asked questions