CGST Circular no. 7/7/2017 dated 01.09.17
System based reconciliation of information furnished in FORM GSTR-1 and FORM GSTR-2 with FORM GSTR-3B – regarding
Circular No. 7/7/2017-GST
F. No. 349/164/2017/-GST
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise and Customs
GST Policy Wing
New Delhi, Dated the 01st September, 2017
The Principal Chief Commissioners/Chief Commissioners/Principal Commissioners/ Commissioners of Central Tax (All)
The Principal Director Generals/ Director Generals (All)
Subject: System based reconciliation of information furnished in FORM GSTR-1 and
FORM GSTR-2 with FORM GSTR-3B – regarding
Sections 37, 38 and section 39 of the CGST Act, 2017(hereinafter referred to as theAct) read with rules 59, 60 and 61 of the CGST Rules, 2017(hereinafter referred to as theRules) require every registered person to furnish details of outward supplies made in amonth in FORM GSTR-1, details of inward supplies received in a month in FORM GSTR-2and a return in FORM GSTR-3 by the 10th, 15th and 20th of the next month respectively.Keeping in view that taxpayers may face certain issues in the initial days after theintroduction of GST, the GST Council extended the date for filing of FORM GSTR-1 andFORM GSTR-2 for the months of July and August, 2017 and approved the filing of asimplified return in FORM GSTR-3B for these two months by the notified due dates aftermaking the due payment of tax.
2. Registered persons opting to utilize transitional credit available under section 140 ofthe Act read with the rules made there under for discharging the tax liability for the month ofJuly, 2017 were required to file FORM GST TRAN -1 on or before 28th August,2017. Thistransitional credit was to be credited to the electronic credit ledger and be available fordischarging the tax liability.
3. As per the provisions of sub-rule (5) of rule 61 of the Rules, the return in FORMGSTR-3B was required to be furnished when the due dates for filing of FORM GSTR-1 andFORM GSTR-2 have been extended. After the return in FORM GSTR-3B has beenfurnished, the process of reconciliation between the information furnished in FORM GSTR-3B with that furnished in FORM GSTR-1 and FORM GSTR-2 would be carried out inaccordance with the provisions of sub-rule (6) of rule 61 of the Rules.
4. The detailed procedure for reconciliation of information furnished in FORM GSTR-3and FORM GSTR-3B is detailed in succeeding paras.
Furnishing of information in FORM GSTR- 1 & FORM GSTR-2:
5. It may be noted that after the registered person has filed his return in FORM GSTR-3B and the statement of outward supplies in FORM GSTR-1, the inward supplies shall beauto drafted for all registered persons (corresponding recipients of supply) and madeavailable to them in FORM GSTR-2A as per sub-rule (3) of rule 59 of the Rules. FORMGSTR-2A is the exact replica of FORM GSTR-2 containing only those details that are autopopulatedfrom the details furnished in FORM GSTR-1 by the corresponding suppliers.Based on the details communicated in FORM GSTR-2A, the registered person shall preparethe statement of inward supplies in FORM GSTR-2 by:-
a. adding, deleting or modifying the invoice level details communicated in FORMGSTR-2A;
b. adding information pertaining to details that are required to be furnished inGSTR-2 but are not part of FORM GSTR-2A like details of imports, details ofsupplies attracting reverse charge that have been received by registered person;
c. providing details of supplies received from composition suppliers and exempt,nil-rated & non GST inward supplies;
d. providing details of advances paid on inward supplies attracting reverse charge, ifany, along with adjustments;
e. providing details of reversal of ITC as per the provisions of rules 37, 39, 42 and43 of the Rules, if any; and
f. providing HSN wise summary details of inward supplies.
Correction of erroneous details furnished in FORM GSTR-3B:
6. In case the registered person intends to amend any details furnished in FORM GSTR-3B, it maybe done in the FORM GSTR-1 or FORM GSTR-2, as the case may be. Forexample, while preparing and furnishing the details in FORM GSTR-1, if the outwardsupplies have been under reported or excess reported in FORM GSTR-3B, the same maybecorrectly reported in the FORM GSTR-1. Similarly, if the details of inward supplies or theeligible ITC have been reported less or more than what they should have been, the samemaybe reported correctly in the FORM GSTR-2. This will get reflected in the revised outputtax liability or eligible ITC, as the case may be, of the registered person. The details furnishedin FORM GSTR-1 and FORM GSTR-2 will be autopopulated and reflected in the return inFORM GSTR-3 for that particular month.
Action on the system-based reconciliation:
7. After the registered person has furnished the statement of inward supplies in FORMGSTR-2 by the extended date, the common portal shall auto-draft Part-A of the return inFORM GSTR-3 for the said month based on the information furnished in FORM GSTR-1and FORM GSTR-2. Based on the revised figures of output tax liability and eligible input taxcredit, Table 12 of Part B of FORM GSTR-3 shall be made available. The common portalwould populate the correct figures of tax payable in column (2) of Table 12 of FORM GSTR-3, based on the information furnished in FORM GSTR-1 and FORM GSTR-2. The tax paidthrough the electronic cash ledger and electronic credit ledger in the return in FORM GSTR-3B shall be displayed by the system in column (3) to (7) of the Table 12 of Part B of FORMGSTR-3. Where there is no difference between the details of output tax liability and eligibleinput tax credit furnished in FORM GSTR-3B and the details furnished in FORM GSTR-1 and FORM GSTR-2, the amount of tax payable and tax paid shall be the same in FORMGSTR-3B and FORM GSTR-3. The person can sign and submit FORM GSTR-3 without anyadditional payment of tax.
Additional payment of taxes:
8. Where the tax payable by a registered person as per FORM GSTR-3 is more than whathas been paid as per FORM GSTR-3B, the common portal would show another instance ofTable 12 for making additional payment of taxes, in accordance with the mandate of clause(b) of sub-rule (6) of rule 61. As the tax payable in column (2) of Table 12 of FORM GSTR-3is more than what was shown in FORM GSTR-3B, the additional amount of tax payable canbe paid by debiting the electronic cash or credit ledger as per the provisions contained insection 49 of the Act along with applicable interest on delayed payment of tax starting from26th day of August, 2017 till the date of debit in the electronic cash or credit ledger. If theeligible ITC claimed by the person in FORM GSTR-2 is less than the ITC claimed andutilised by the registered person in FORM GSTR-3B, the same would be added to his outputtax liability and shall have to be paid by him along with interest by debiting the electroniccash or credit ledger as per the provisions contained in section 49 of the Act before submitting the return in FORM GSTR-3 to complete the process. It may be noted that wherethe transitional credit as declared in FORM GST TRAN-1 is credited to the electronic creditledger, the same can be utilised for the payment of the said additional tax liability.
Additional claim of eligible ITC:
9. Where the eligible ITC claimed by the taxpayer in FORM GSTR-3B is less that theITC eligible as per the details furnished in FORM GSTR-2, the additional amount of ITCshall be credited to the electronic credit ledger of the registered person when he submits thereturn in FORM GSTR-3 (in accordance with clause (c) of sub-rule (6) of rule 61). However,simultaneously, if there is an increase in the output tax liability, the registered person canutilise this additional amount of ITC eligible as per the details furnished in FORM GSTR-2along with the balance in the electronic cash ledger, if required, for the payment of theincreased output tax liability and submit his return in FORM GSTR-3.
Reduction in output tax liability:
10. Where the output tax liability of the registered person as per the details furnished inFORM GSTR-1 and FORM GSTR-2 is less than the output tax liability as per the detailsfurnished in the FORM GSTR-3B and the same is not offset by a corresponding reduction inthe input tax credit to which he is entitled, the excess shall be carried forward to the nextmonths return to be offset against the output liability of the next month by the taxpayer whenhe signs and submits the return in FORM GSTR-3. However, simultaneously, if there is adecrease in the eligible input tax credit, the same will be adjusted against the abovementioned reduction in output tax liability and the balance, if any, of the reduction in outputtax liability shall be carried forward to the next months return to be offset against the outputliability of the next month.
Submission of GSTR-3B without payment of taxes:
11. Where, for some reasons, the registered person has only submitted the return inFORM GSTR-3B and has not made the payment of taxes by debiting the same from hiselectronic cash or credit ledger, the return shall still be subjected to the reconciliation process as detailed above. Such registered person should furnish the details in FORM GSTR-1,FORM GSTR-2 and sign and submit the return in FORM GSTR-3 along with the payment ofthe due taxes as per the provisions of section 49 of the Act. However, since the payment wasnot made on or before the due date, the registered person shall be liable for payment ofinterest on delayed payment of tax starting from 26th day of August, 2017 till the date of debitin the electronic cash and / or credit ledger but will not be liable to pay any late fee providedthe requisite return in FORM GSTR-3B was submitted on or before the due date.
12. Where the registered person has not submitted the return in FORM GSTR-3B, he isrequired to furnish the details in FORM GSTR-1 and FORM GSTR-2 and sign and submitthe return in FORM GSTR-3 along with the payment of the due taxes as per the provisions ofsection 49 of the Act. However, since the payment was not made on or before the due date,the registered person shall be liable for payment of interest on delayed payment of taxstarting from 26th day of August, 2017 till the date of debit in the electronic cash and / orcredit ledger. No late fee, however, would be levied for late filing of return in terms ofsection 47 of the Act, in accordance with the recommendation of the GST Council, asnotified vide Notification No. 28/2017-Central tax dated 01.09.2017.
Processing of information furnished:
13. After submission of the information in FORM GSTR-1 and FORM GSTR-2, the processof matching as per section 41, 42 and 43 of the Act read with rules 69 to 76 of the Rules shallbe carried out as if these details were submitted in the regular course. Any amendment in thedetails furnished in FORM GSTR-1 and GSTR-2 shall be done following the procedure laiddown under sub-section (3) of section 37 and sub-section (5) of section 38 of the Actrespectively. The return shall be considered to be a valid return when the tax payable as perFORM GSTR-3 has been paid in full after which the return shall be taken up for matching.
14. It is requested that suitable trade notices may be issued to publicize the contents ofthis circular.
15. Difficulty, if any, in implementation of the above instructions may please be broughtto the notice of the Board. Hindi version would follow.
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