GST filing gets tougher: No room for error in GSTR-3B from July

From July onwards, taxpayers will no longer be able to edit the auto-populated tax liability in their GSTR-3B returns, marking a major change in the Goods and Services Tax (GST) framework. The GST Network (GSTN) has rolled out this update with the aim of curbing misuse and plugging revenue leakages. However, tax experts warn that this will demand higher accuracy from suppliers and could trigger cash flow challenges for buyers.

To address discrepancies in GSTR-1 filings, a new form, GSTR-1A, has been introduced, but it does not operate in real-time. This means any corrections made through GSTR-1A could delay Input Tax Credit (ITC) for buyers, potentially leading to working capital issues. For instance, since the GSTR-2B (used by buyers to file GSTR-3B) is generated on the 14th of each month, corrections made by a supplier after this date may only reflect in the next month's ITC cycle, delaying credit and tying up funds.

"This is a major structural shift," said Deep Thakkar, chartered accountant and co-chairman of the Indirect Tax Committee at the Gujarat Chamber of Commerce and Industry (GCCI). "Currently, suppliers file GSTR-1, which auto-populates their GSTR-3B and also feeds into the buyers' GSTR-2B. If suppliers make an error or want to adjust their tax liability, they currently edit GSTR-3B directly. That option will no longer be available."

Explaining the rationale, a senior GST official stated that the decision had been in development for nearly 18 months. When a supplier files GSTR-1, the tax liability is auto-populated and becomes part of the buyer's ITC. "Allowing edits in GSTR-3B was leading to misuse—essentially allowing ITC to be passed on without corresponding tax being paid," the official said. "At some point, the system needs to be secured to protect government revenue."

While the change is expected to reduce fraudulent ITC claims, chartered accountants believe it will also increase the compliance burden. Thakkar noted that even genuine mistakes can only be rectified through GSTR-1A, which needs to be streamlined to avoid penalizing honest taxpayers. Another Chartered Accountant, Karim Lakhani, echoed these concerns, stating, "The margin for error has shrunk dramatically. Every supplier will now need to file GSTR-1 with utmost accuracy. Any lapse can impact their clients' ability to claim timely ITC."